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Monetary Policy Council. Interest rates. MPC decision in May 2025
The Monetary Policy Council (MPC) has reached a decision. Interest rates will be reduced by 50 basis points to 5.25 percent, as stated in a recent announcement. The last adjustment to the interest rates occurred in October 2023.
The reference rate has decreased from 5.75 percent to 5.25 percent, as reported by the National Bank of Poland. This decision aligns with market forecasts.
MPC decision on interest rates
The NBP declared that the Monetary Policy Council has opted to lower the other NBP interest rates by 0.50 percentage points to the following levels: • Lombard rate to 5.75 percent annually; • Deposit rate to 4.75 percent annually; • Bill of exchange rediscount rate to 5.30 percent annually; • Bill of exchange discount rate to 5.35 percent annually.
„The resolution made by the Monetary Policy Council will take effect on 8 May 2025,” it was indicated.
Interest rates in Poland and Europe PAP/Michał CzernekInterest rate cut. RPP justification
„Considering the incoming information, which includes lower current and projected inflation, slowing wage growth, and weaker economic indicators, the Council believes it was appropriate to modify the level of NBP interest rates,” the Monetary Policy Council stated following the May meeting.
„The uncertainty remains regarding the evolution of demand pressures and the labor market situation in the upcoming quarters, the level of administered prices for energy carriers, and future actions in fiscal policy. Another source of uncertainty is the trajectory of inflation globally, particularly due to shifts in the trade policies of major economies,” the Monetary Policy Council added.
Interest rates. Comments after the MPC decision
„This decision has been anticipated for quite some time. Prior to today’s cut, the real interest rate (ex ante) was the highest since early 2015, standing at 2.4%. Improved inflation outlook offers the possibility for additional reductions. We estimate inflation in mid-2025 to be approximately 3% year-on-year. We believe that in 2025, rates could decrease by a total of 125 basis points, reaching 3.75% by the end of 2026,” analysts from ING Bank Śląski commented.
„The MPC kept us waiting a bit, but it delivered what the market expected,” remarked economists from Bank Pekao.
„We believe another cut of 50 basis points will occur in June, after which the MPC will adopt a wait-and-see approach,” the analysts added.
Economists from mBank stated: „What does the MPC press release indicate: – dovish (state diagnosis) – either the MPC neglected to mention that current rates are guiding inflation towards the target (as was the case a month ago) or it signals that they are not achieving that, and another 50 basis points will follow shortly.”
„We adhere to the second interpretation,” they emphasized.
