Poland's Monetary Policy Council held the reference rate at 5.25 per cent at its October 2025 meeting, keeping borrowing costs unchanged as consumer price inflation continued to run above the upper bound of the National Bank of Poland's tolerance band. The decision, communicated in a statement published on the central bank's website, reinforces the MPC's stance that inflation must return sustainably toward target before further easing can be considered.

Polish CPI has remained above the 4 per cent threshold that marks the upper tolerance limit around the NBP's 2.5 per cent inflation target. The persistence of elevated price growth has made the council cautious about resuming the rate reductions that had been taken in earlier periods, with policymakers reiterating that the inflation target is the anchor for any future adjustments to the policy stance.

INFLATION TARGET ANCHORS POLICY STANCE

The NBP has been explicit in conditioning any further rate cuts on a credible return of inflation toward the 2.5 per cent target. By keeping the reference rate at 5.25 per cent, the council is signalling that it will not act pre-emptively to ease financial conditions while the CPI print remains comfortably above tolerance. This posture distinguishes the NBP from several other central European peers that have already embarked on easing cycles.

The sources of above-target inflation in Poland are multiple, with energy prices, food costs, and services inflation all contributing to the headline reading at various points. The council's assessment of the inflation outlook will depend partly on how quickly these components moderate, as well as on the trajectory of wage growth, which has remained robust in the context of a tight labour market.

Poland's fiscal position and the pace of EU-funded investment spending are additional variables the MPC monitors when assessing aggregate demand and its implications for price stability. Higher public expenditure can sustain demand in ways that complicate the disinflation process, and the council has noted the interaction between fiscal policy and its own monetary objectives.

EASING CONTINGENT ON DISINFLATION PROGRESS

The council's reiteration of its commitment to the inflation target before any further easing is a deliberate form of forward guidance intended to anchor market expectations. Polish bond markets and currency traders will have noted the unchanged decision as confirmation that rates are unlikely to fall in the near term absent a meaningful improvement in the inflation data.

The NBP has previously taken steps to lower the reference rate during periods when inflation appeared to be decelerating, but those earlier cuts preceded a resurgence in price pressures that has since caused the council to pause. The October decision reflects lessons drawn from that experience, with members appearing reluctant to repeat a premature easing that was subsequently reversed.

The next MPC meeting will allow the council to assess updated inflation readings and any changes in the growth outlook before determining whether conditions have shifted sufficiently to revisit the rate question. Until the CPI trajectory offers clearer evidence of a durable return toward the 2.5 per cent target, the 5.25 per cent reference rate is expected to remain in place.