NBP projects inflation close to target
Interest rates remain unchanged
Today, the Monetary Policy Council decided to keep interest rates unchanged, with the NBP reference rate standing at 3.75%. The MPC’s decision was consistent with both our forecast and market expectations. In its press release published after the meeting, the Council noted that energy commodity prices on global markets had declined over the past month, including a marked fall in oil prices. This represents an important change relative to the June release, in which the Council pointed to higher global fuel prices resulting from supply constraints linked to the conflict in the Middle East. At the same time, the Council reiterated its assessment that the outlook for global economic activity and inflation remains subject to uncertainty, particularly in relation to developments in the Middle East.
The Council also noted that CPI inflation fell to 2.5% YoY in June, from 3.1% YoY in May, mainly due to declines in the annual growth rates of prices of fuels for private means of transport and of food and non-alcoholic beverages. Compared with the June statement, “fuel price regulations” were removed from the list of risk factors for the inflation outlook. Fiscal policy, developments in domestic economic activity and wage growth continue to be identified as the key risks.
NBP projects inflation close to target
The Council reviewed the results of the July inflation and GDP projection based on the NECMOD model. In accordance with the projection, which was prepared assuming unchanged NBP interest rates and takes into account data available up to 17 June 2026, there is a 50-percent probability that inflation will be in the range of 2.4%-3.3% in 2026 (vs. 1.6%-2.9% in the March projection), 1.5%-4.0% in 2027 (vs. 1.1%-3.7%) and 0.8%-3.9% in 2028 (vs. 0.9%-4.0%). There is a 50-percent probability that GDP growth will be in the range of 3.0%-4.4% in 2026 (vs. 3.1%-4.7% in the March projection), 1.8%-3.7% in 2027 (vs. 2.0%-3.8%) and 1.9%-4.1% in 2028 (vs. 1.8%-4.1%).
Still, comparisons between the July and March projections should be treated with caution. The March projection was based on data available up to 19 February 2026, and therefore did not take into account the impact of the outbreak of the conflict in the Middle East and the resulting increase in energy commodity prices on the inflation and growth outlook. For this reason, differences between the July and March inflation paths should not be viewed in isolation as an argument in favour of a more restrictive monetary policy stance. It is more important that the July projection points to average annual inflation in 2026 running broadly in line with our forecast despite current inflation having fallen to the NBP target. This means that, following the temporary decline in inflation in June, inflation should rebound in the coming quarters, including a noticeable increase in Q4 2026 (see MAKROmapa of 06/07/2026). Consequently, in our view, the likelihood of interest rate cuts being resumed before the end of the year remains very low.
Stabilisation of interest rates remains the most likely scenario
In our opinion, the press release published after today’s meeting is less hawkish than in June. This is supported by the sharp decline in inflation to 2.5% YoY and the removal of references to fuel price regulations as one of the risk factors for the inflation outlook. At the same time, the Council does not signal any readiness to resume the cycle of interest rate cuts. The statement also reiterated the assessment that further decisions will depend on incoming information regarding the outlook for inflation and economic activity. We therefore maintain our view that NBP interest rates will remain unchanged for a longer period of time. A. Glapiński’s press conference tomorrow should shed more light on the monetary policy outlook. We expect its message to be consistent with a “wait-and-see” approach.
In our view, today’s MPC decision to keep interest rates unchanged and the content of the press release published after the meeting are neutral for the zloty and Polish bond yields.