Poland's Central Bank Lowers Key Interest Rate to 3.75%

The Polish central bank has cut its key interest rate again. At its meeting on March 4, the Monetary Policy Council of the National Bank of Poland (NBP) reduced the interest rate by 25 basis points to 3.75 percent.

With this move, the NBP is continuing its easing cycle. Previously, between July and December, it had implemented five rate cuts of 25 basis points each. After a two-month pause, the central bank is now resuming its easing measures.

In total, the NBP cut interest rates six times in 2025 by a combined 175 basis points. This was driven by falling inflation, which is increasingly approaching the central bank’s target range of 1.5 to 3.5 percent.

Inflation Continues to Fall

New data from the Central Statistical Office (GUS) show that the inflation rate fell to 2.2 percent in January. In December, it had stood at 2.4 percent. The central bank stated that an adjustment to interest rates was justified in light of current inflation trends and the economic outlook.

At the same time, the NBP noted that wage growth in the corporate sector slowed significantly in January. This, too, is considered an important factor in the easing of price pressures in the Polish economy.

Geopolitical Risks Remain

The decision was made despite ongoing uncertainties in the international environment. Tensions in the Middle East have recently led to rising energy prices. The price of oil temporarily rose to over $80 per barrel.

The central bank therefore warned of potential risks to inflation trends. Factors contributing to uncertainty include fiscal policy, the expected recovery in demand, and developments in commodity prices.

New inflation and growth forecasts

Along with the interest rate decision, the NBP published an updated macroeconomic forecast. According to the forecast, inflation in 2026 is expected to range between 1.6 and 2.9 percent. In the previous forecast, the range had been between 1.9 and 4 percent. For 2027, the central bank expects an inflation rate between 1.1 and 3.7 percent.

The NBP is also somewhat more optimistic about economic growth. For 2026, it forecasts GDP growth of between 3.1 and 4.7 percent. For 2027, it expects a growth rate of 2.0 to 3.8 percent.

Analysts Expect Further Interest Rate Cuts

According to analysts, domestic economic factors played a key role in the interest rate cut. These include, in particular, lower inflation forecasts and the recent appreciation of the złoty. PKO BP Bank stated that the future development of energy prices and foreign exchange markets will be decisive for the central bank’s next steps.

In the base-case scenario, many analysts expect the key interest rate to fall further to around 3.5 percent. This move could take place as early as April. However, ongoing geopolitical tensions could slow the pace of monetary easing.

This article was produced in cooperation with our partner bne intelliNews