Narodowy Bank Polski cuts reference rate to 4.50% as inflation eases

Poland's Monetary Policy Council cut Narodowy Bank Polski's reference rate by 25 basis points to 4.50% at its meeting on 7–8 October 2025. The decision was announced on 8 October and took effect on 9 October.

The council lowered the other official rates by the same margin, taking the lombard rate to 5.00%, the deposit rate to 4.00%, the rediscount rate to 4.55% and the discount rate to 4.60%.

FOURTH CUT OF 2025

The move was the council's fourth reduction of the year. The reference rate had stood at 5.75% from October 2023 until May 2025, when the council cut it by 50 basis points to 5.25%. It was lowered to 5.00% in July and to 4.75% in September before the October decision, which brought cumulative reductions since May to 125 basis points.

INFLATION OUTLOOK

In its statement, the council said an improvement in the near-term inflation outlook justified the cut. According to a flash estimate from Statistics Poland, consumer price inflation was 2.9% year on year in September, unchanged from August and within the tolerance band of one percentage point either side of the central bank's 2.5% target. Inflation excluding food and energy prices remained at a similar level, while services price growth was still elevated. Ahead of the meeting, legislation extending the freeze on household electricity prices into the fourth quarter of 2025 had been adopted and signed by the president.

The council noted that retail sales and industrial output rose in August while construction output fell, and that wage growth, though lower, remained relatively high, with enterprise-sector data pointing to a gradual slowdown. It cited fiscal policy, consumer demand, wage growth, energy prices and developments in external markets as sources of risk for inflation, and said further decisions would depend on incoming data on inflation and economic activity.