That said, there are plenty of arguments which suggest policymakers could favour a cut this month. In August, we saw wage growth data which indicated wages were ‘gravitating downward’ instead of stabilising at a high level, as the MPC fears. Employment levels also continue to decline, although August appears slightly better in seasonally adjusted terms, and the negative trends seen in the labour market are not worsening.
Industry has continued to stagnate for more than three years, largely due to a decline in Germany’s economy. There is also, of course, a problem with Polish industry’s competitiveness, following sharp increases in wages in recent years, coupled with large investment backlogs among companies and intensifying competition from Asia. Inflation risks are easing as indicated by another negative reading of PPI price deflation.
At the same time, the electricity price freeze was formally extended into the fourth quarter of this year, and September’s flash CPI numbers surprised to the downside. That’s why the timing of the next cut – a choice between this month and November – is such a close call. And don’t forget that at September’s press conference, NBP Governor Adam Glapiński stated that the energy price freeze would support a rate cut, which was something of a surprise given previous arguments for keeping monetary policy restrictive.
We continue to expect only one more 25bp cut this year in November, when the new NBP projection is published. In 2026, the MPC is expected to deliver two more reductions, bringing the target rate to 4.00%. Risks to our baseline scenario remain tilted towards lower interest rates, as the upcoming CPI numbers are expected to be close to the central bank’s target (2.5% +/- 1pp) while wage pressures are expected to ease further.