Polish Central Bank Holds Rate at 3.75% for Eighth Month as Inflation Expectations Rise
Key Facts
The National Bank of Poland kept its benchmark interest rate at 3.75% in its decision issued on November 4, holding it steady for an eighth consecutive month. The decision matched the expectations of 29 of the 33 economists surveyed by Bloomberg, according to an article published by Investing.com and attributed to Reuters. The hold came as the bank’s estimate published alongside coverage of the decision showed a higher range for expected annual inflation in 2027 than in its previous estimate. This divergence between a steady rate and rising price expectations places the monetary policy outlook at the center of debate over upcoming decisions. The benchmark rate stood at 3.75% in the November decision.
Statistics Poland estimated that consumer prices rose 3.5% year over year in October, but fell 0.4% from the previous month, according to a preliminary estimate. The annual reading was 4.1% in September before slowing to 3.5% in October. Coverage of the decision attributed the decline to lower fuel prices after the government reinstated price caps at fuel stations. The figures show different paces for annual inflation and monthly changes, with the index falling month over month despite remaining higher year over year. These readings remain part of the backdrop to the rate hold and inflation estimates for next year.
The November estimate put annual inflation in 2027 in a range of 3.1% to 5.3%, compared with a range of 1.5% to 4.0% in the previous estimate from July. The wider range and higher bounds mean the new estimate allows for readings above what was expected in July. At the same time, this estimate alone does not change the fact that the bank kept the rate at 3.75% in November, nor does it settle the timing of any subsequent adjustment. Before the November decision, ING said it expected rates to remain unchanged in November and December 2026, followed by a cumulative increase of 50 basis points during the first quarter of 2027. The institution also linked the inflation outlook to the impact of regulated gas prices.
In its forecast published before the November decision, ING said: "Our baseline forecast remains for no change in rates in November or December 2026, followed by a cumulative 50-basis-point increase in the first quarter of 2027." This was an assessment of the policy path before the decision, which kept rates unchanged in November. The forecast therefore sets out a potential path that begins with rates staying on hold through the end of 2026, then shifts to increases in early 2027. ING also noted that regulated gas prices would affect the inflation path, without specifying the size of that impact. The difference in the forecast horizon between the November decision and the estimate for the first quarter of 2027 reflects how the expected rate path depends on price developments in the coming periods.