On May 7, 2025, the Monetary Policy Council (RPP) is poised to make a pivotal decision regarding interest rates, with expectations running high for a cut for the first time in 1.5 years. Economists widely anticipate that the RPP will lower the main reference rate from its current level of 5.75 percent to 5.25 percent, a significant shift that could impact borrowers across Poland.
The last time the RPP adjusted interest rates was in October 2023, when it lowered them by a total of 100 basis points over two months. Since then, the rates have remained unchanged, but discussions around potential cuts have intensified, especially following the RPP's April meeting where the committee maintained the status quo for the seventeenth consecutive time.
Adam Glapiński, the President of the National Bank of Poland (NBP) and RPP chairman, hinted at the changing sentiment within the council during a press conference. He noted that while the rates were not altered at the last meeting, “the RPP’s attitude has fundamentally changed.” Glapiński did not rule out the possibility of cuts occurring as soon as the May meeting.
Adding to the anticipation, RPP member Ludwik Kotecki stated in an interview with Polish Radio that the focus for the May meeting would not be whether to cut rates, but rather the extent of the cut and whether it would signal the beginning of a series of reductions. “It looks like in May, the RPP will discuss two things: the scale of the cut and whether it will be a one-time adjustment or the start of a cycle of cuts,” Kotecki remarked.
Another RPP member, Przemysław Litwiniuk, has been vocal about the necessity for a 50 basis point reduction. He emphasized that if no one else proposes such a cut, he would do so himself, indicating a strong push within the council for significant action.
Market consensus, as reported by PAP Business, aligns with these expectations, forecasting a 50 basis point cut to bring the reference rate down to 5.25 percent. However, not all members of the RPP are in agreement. Joanna Tyrowicz expressed her skepticism, stating that she sees no compelling reasons for a cut, citing persistent high inflation levels and the need for caution.
Tyrowicz's concerns echo the sentiments expressed by many economists who fear that while a cut may provide immediate relief for borrowers, it could also risk reigniting inflationary pressures. She noted, “Overall: no breakthrough. There are no major sources of concern from a monetary policy perspective, but there are also no premises for cuts.”
Alior Bank's chief economist, Agata Filipowicz-Rybicka, commented on the broader economic implications of potential cuts. She indicated that if inflation continues to decline—projected to fall below 3.5 percent in the second half of 2025—then further gradual easing of monetary policy would be justified.
Filipowicz-Rybicka also pointed out that the key factor influencing the RPP's decisions will be inflation. As inflation rates have shown signs of cooling, the economic landscape appears more favorable for rate reductions. “In this setup, further gradual easing of monetary policy is justified,” she stated.
As the RPP meeting unfolds, the implications for borrowers are significant. Analysts predict that lower interest rates will lead to reduced monthly mortgage payments, with estimates suggesting that payments could decrease by several hundred zlotys for a typical loan. Piotr Kuczyński, an analyst at Xelion, explained that the impact of lower rates would not be immediate, but borrowers could see relief within three to six months, depending on their loan terms.
Jacek Furga, chairman of the Committee for Financing and Real Estate at the Polish Bank Association, echoed this sentiment, noting that a 50 basis point cut could result in a reduction of over 200 zlotys for a borrower with a 500,000-zloty mortgage. “This is already tangible money, and I think it would be a significant incentive,” Furga remarked.
However, not everyone is optimistic about the potential cuts. Tadeusz Białek, president of the Polish Bank Association, raised concerns that lower rates could diminish bank profits, which are crucial for maintaining capital that funds the economy. “Lower rates will reduce bank profits, which are essential for financing economic growth,” he cautioned.
Former RPP member Adam Noga also urged caution, suggesting that the space for rate cuts is still limited due to lingering inflation risks. He recommended a gradual approach, starting with smaller cuts to assess their impact on the economy.
As the clock ticks down to the RPP's decision, the stakes are high for borrowers and the broader economy. With pressure from various economic factions, the council's decision will undoubtedly shape the financial landscape in Poland for the coming months.
In this context, the upcoming announcement at around 3:00 PM today could mark a turning point for many, as the prospect of lower rates has been on the horizon for nearly two years. As the nation waits with bated breath, the implications of this decision will resonate across households and businesses alike.
