We’ve been hearing from the Governor of the National Bank of Poland, Adam Glapinski, explaining the reasons for lowering the country’s interest rate again by 25bp to 4.25%. It was the fifth rate cut this year.
Firstly, he points out that, according to preliminary data from the Central Statistical Office (GUS), CPI inflation in October fell to 2.8% year-on-year and is close to the central bank’s 2.5% inflation target, which he described as a great success.
Secondly, Glapiński noted that initial estimates indicate that core inflation has also declined.
Thirdly, he stated that the medium-term inflation outlook has improved, with inflation projections in line with the 2.5% target with +/-1pp tolerance band over the next two years.
Regarding medium-term prospects, Adam Glapiński referred to the NBP staff’s November projection, which assumes a lower level of inflation in Q4 2025 and in 2026 than previously expected, despite a marked decrease in interest rates since the July projection. Over the projection horizon, inflation is expected to be broadly consistent with the target. The Governor emphasised that in 2025, the MPC has already cut rates by 150 basis points, which supports economic growth and reduces the costs of public debt service (by PLN 20 billion over two years) and mortgage payments.