FX.co ★ Poland Cuts Rates For 1st Since October 2023

The National Bank of Poland trimmed its key interest rate to 5.25% during its May 2025 meeting, aligning with expectations, marking the first reduction since October 2023. The Lombard and deposit rates were also adjusted to 5.25% and 4.25%, respectively. This decision stemmed from diminishing inflation, a slowdown in wage growth, and emerging signs of economic fragility in early 2025, coupled with ongoing uncertainties regarding demand, the labor market, energy costs, and fiscal policy. Inflation rates decreased to 4.2% in April, down from 4.9% in March, falling short of the central bank’s target of 4.3%. This was influenced by factors such as reduced fuel prices and the diminishing impact of the previous year's VAT increase on food prices. Despite industrial growth, declines were noted in retail sales and construction sectors. Unemployment rates remained low, but corporate employment showed a slight dip, and wage growth weakened. The central bank indicated that future decisions would hinge on inflation trends and economic activity.