National Bank of Poland’s governor says the current level of interest rates is adequate

Commenting on the factors behind the Monetary Policy Council’s decision, central bank governor Adam Glapinski noted that inflation declined to 3.1% year-on-year in May and remains within the range of acceptable deviations from the target. Inflation is being pushed up by higher fuel prices, reflecting the rise in oil prices in response to the conflict in the Middle East. At the same time, the NBP governor noted that in recent weeks, expectations of a peace agreement have strengthened, and oil prices have eased somewhat.

Glapinski reiterated that the increase in oil prices constitutes a strong supply-side shock to the economy and its scale depends on external factors, beyond the influence of monetary policy. On the one hand, it boosts inflation both directly (through higher fuel prices) and indirectly (via rising business costs). On the other hand, it dampens real income growth, increases uncertainty and weakens economic activity.

Commenting on domestic economic conditions, the NBP governor noted that despite solid growth in 1Q26 (3.5% YoY), which was clearly stronger than in the euro area, the economy slowed compared to 4Q25, when it expanded by 4.1% YoY. Moreover, full-year GDP growth in 2026 is likely to be lower than expected a few months ago and slower compared to last year.

According to the NBP, the inflationary impact of the Middle East conflict is smaller than previously feared and clearly weaker than during the 2021–22 energy crisis. Labour market conditions are less tight, and the rise in oil prices is not accompanied by significant supply chain disruptions (except for fuel). Additionally, interest rates are higher than at the onset of the previous energy shock and are positive in real terms. At the same time, the PLN exchange rate remains stable.

Glapinski also highlighted that wage growth continues to slow, which is favourable from an inflation perspective. In 1Q26, wage growth in the economy moderated again, while wage growth in the corporate sector in April was the lowest in five years.

In the central bank’s assessment, inflation should remain moderate, and Poland’s inflation situation is relatively favourable compared to other countries and better than previously feared. In the governor's view, the May inflation reading – significantly below expectations – has reduced the risk of rate hikes. A discussion on interest rate hikes could emerge only if fuel prices were to rise persistently and the government were to withdraw measures aimed at stabilising them.

Glapinski's diagnosis of the Polish economy can be summarised as:

1. “Slightly elevated inflation”,
2. “A modest weakening of economic growth”
3. “Decelerating wage growth”

The NBP governor emphasised that real interest rates are positive and at an appropriate level to stabilise inflation. In his view, there is currently no reason to change interest rates. Steady policy remains the most likely outcome, and future MPC decisions will depend on incoming data.

The NBP communication is consistent with our baseline scenario, which assumes that interest rates would remain unchanged at least until the end of 2026.