The Monetary Policy Council will meet on 7-8 July to decide on interest rates. According to economists from ING, the next move will be a cut, not a hike, as inflation has fallen to the central bank’s target.
After six rate cuts in 2025, from 5.75% to 4.25%, the RPP has so far made only one reduction in 2026. Since March, the reference rate stands at 3.75%, the lowest since March 2022. The preliminary estimate from Statistics Poland shows June CPI inflation dropped to 2.5% year-on-year from 3.1% in May, surprising on the downside for the second consecutive month.
Inflation at target eases pressure on RPP
– According to the preliminary GUS estimate, inflation fell to 2.5% y/y in June, down from 3.1% y/y in May. For the second month in a row, inflation surprised significantly on the downside and is now at the NBP’s inflation target, meaning there is no need for rate hikes, and the fuel shock did not generate a clear inflationary impulse – economists from ING said in their commentary.
June saw a 7.4% month-on-month decline in fuel prices, supported by a drop in crude oil from over $100 per barrel to just above $70 currently. This allowed lower retail fuel prices despite the reintroduction of higher excise duties at the start of 2026. Food and non-alcoholic beverage prices fell by 0.7% month-on-month in June, following a 1% drop in May, and are now lower than a year ago. Energy prices also edged down by 0.4% month-on-month.
Rate cuts back on the table for second half of 2026
The June inflation reading puts the RPP in a comfortable position, according to ING. Just three weeks ago, FRA contracts were pricing in at least three 25-basis-point hikes. Now, market expectations are shifting. – We expect that speculation will now begin that NBP rates could be cut in the second half of 2026 – the report added.
From today’s perspective, it appears that the war in the Middle East interrupted the monetary policy adjustment cycle, but the NBP may return to it if medium-term inflation prospects remain favorable. – The July inflation projection should allow the Council to better assess current trends and the potential room for monetary policy easing – ING concluded.
Źródło: wnp.pl, Fot. Andreia Veiga / Shutterstock
