In a significant shift in monetary policy outlook, Goldman Sachs has projected that external factors will play a crucial role in driving disinflation in Poland, paving the way for the Monetary Policy Council (RPP) to implement further interest rate cuts in 2025. According to their latest report, the investment bank anticipates that the RPP will reduce rates by an additional 100 basis points (pb) next year.
Goldman Sachs' analysis highlights that the current inflation dynamics in Poland are influenced more by external conditions than internal pressures. The report notes, "President Glapiński's comments were hawkish compared to his April appearance, citing concerns about Polish inflation due to: (a) stronger GDP growth in Q2, (b) loose fiscal policy, and (c) inflation reaching a bottom of 3.5 percent YoY in Q3 before rising in Q4 due to the expiration of energy price limits for households." This perspective underscores a growing concern among economists regarding the inflation trajectory in Poland.
The report from Goldman Sachs emphasizes that disinflationary external factors, such as weak producer price growth, significantly lower wholesale gas prices compared to their peak, and a strengthening zloty, are expected to continue exerting downward pressure on inflation throughout the year. The bank's analysts stated, "Given our mild views on the path of Polish inflation and the downward path of ECB rates, we expect the NBP to make further cuts of 100 pb in the remainder of 2025."
Adding to the conversation, Adam Glapiński, the President of the National Bank of Poland (NBP), indicated during a press conference that there is a consensus among RPP members regarding the potential for further rate cuts. He mentioned that if the Council decides to lower rates again in July or autumn, the majority would support a cycle of reductions. Glapiński remarked that adjustments of 25 pb are more manageable for the central bank than 50 pb changes.
In a related development, RPP member Przemysław Litwiniuk expressed his views on TVN24, suggesting that autumn might be an opportune time for a significant cut in interest rates. Litwiniuk estimated that the overall correction in interest rates for 2025 could total 125 pb. He elaborated, "If no external circumstances disrupt our outlook, the upcoming autumn could be a good moment for a solid step in lowering interest rates."
Litwiniuk also pointed out the importance of energy prices in determining inflation levels. He cautioned that if energy tariffs revert to 623 PLN, the inflation rate could rise. However, he remains optimistic, stating, "Commodity prices indicate that we might see similar prices to those currently frozen, suggesting that our estimates for inflation returning to 4.2 percent in the last quarter of this year could be overestimated."
The RPP's recent decision during its meeting on May 6-7, 2025, to lower all NBP interest rates by 50 pb, including the reference rate to 5.25 percent, aligned with market expectations. This move reflects the Council's proactive approach to managing inflationary pressures while considering external economic factors.
As the Polish economy navigates these turbulent waters, the interplay between domestic fiscal policies and international economic conditions will be critical in shaping the future of interest rates and inflation. With Goldman Sachs and RPP members weighing in on the matter, the coming months will be pivotal for economic policy in Poland.
