Interest rates remain unchanged
Today, the Monetary Policy Council has decided to keep interest rates unchanged, with the NBP reference rate remaining at 4.00%. This means our forecast of a 25bp rate cut did not materialise. Market expectations were sharply divided between a cut and keeping rates unchanged.
As in January, the post-meeting press release noted that economic activity growth in Q4 2025 was probably close to that recorded in Q3 2025. However, a new passage was added, stating that “incoming information suggests that CPI inflation may decrease in 2026 Q1 and remain at a level consistent with the NBP inflation target in the coming quarters”. Similarly to January, the MPC highlighted that “against this background, the Council decided to keep the NBP interest rates unchanged”. Beyond that, the wording of the post-meeting statement was only slightly modified. The Council has once again listed the main risk factors for inflation outlook, which included “fiscal policy, expected recovery of demand in the economy, further developments in wage growth as well as macroeconomic situation abroad, including changes in global commodity prices and inflation”.
MPC prefers to wait before cutting rates
In our view, the post-meeting press release indicates that the main argument behind today’s decision to keep rates unchanged was the lack of new inflation data since the January meeting despite the Council itself seeing a high probability of further disinflation in the coming months. The MPC also reiterated its assessment that the future level of interest rates will depend on “incoming information regarding prospects for inflation and economic activity”. Therefore, we believe the Council will ease monetary policy by 25bp at its March meeting, after reviewing January inflation data, which will be published next week. Like the market consensus, we think inflation fell in January to below 2.0% YoY. The latest inflation projection will also be published in March, allowing for a more accurate assessment of the outlook for medium-term price growth. In our view, that terminal NBP reference rate consistent with macroeconomic equilibrium is 3.50%. Consequently, we expect the next (after March) and, at the same time, the final 25bp cut in this easing cycle to come at the April meeting. A. Glapiński’s press conference tomorrow should shed more light on the monetary policy outlook.
Today’s MPC decision to keep interest rates unchanged, as well as the tone of the post-meeting press release, are – in our opinion – neutral for the PLN exchange rate and Polish government bond yields.
