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Poland’s central bank lowered its main interest rate by 25 basis points to 4.25% on Wednesday, continuing its efforts to support the economy as inflation cools.
The National Bank of Poland also reduced other key rates, including the lombard rate to 4.75%, the deposit rate to 3.75%, the rediscount rate to 4.30%, and the discount rate to 4.35%. All the new rates will take effect from November 6.
This latest move adds to a total of 150 basis points in rate cuts so far this year. Policymakers have been encouraged by steady declines in inflation. Data from Statistics Poland showed that annual consumer inflation slowed to 2.8% in October, down slightly from 2.9% in September, mainly due to lower food prices.
The decision came even though some officials had hinted at a possible pause in rate cuts, as the government continues to run one of the largest budget deficits in the European Union.
Despite that, Poland’s economy remains on solid ground. Retail sales, industrial output, and construction activity all increased in September, and the country is expected to grow by more than 3% this year and next. However, unemployment has edged up to its highest level since early 2023.
According to the central bank’s new forecasts, inflation is expected to stay between 3.6% and 3.7% in 2025, 1.9% to 4.0% in 2026, and 1.1% to 4.1% in 2027. Economic growth is projected between 3.1% and 3.8% in 2025, 2.7% and 4.6% in 2026, and 1.5% to 3.7% in 2027.
The bank said that any future rate changes will depend on how inflation and the broader economy evolve, noting that government spending, strong demand, and wage growth could still pose risks for inflation.