Poland's Central Bank Delays Interest Rate Cuts

Polish central bank Governor Adam Glapinski has pushed back expectations for interest rate cuts, indicating that discussions may not occur until at least October 2025, and possibly delaying any reductions until 2026 due to inflation concerns. This shift follows the Monetary Policy Council's decision to maintain the benchmark rate at 5.75%, where it has remained for 14 months, amidst persistent inflationary pressures. Policymakers, however, are divided; some members still anticipate discussions on monetary easing to begin as early as March. The governor cited complications from upcoming changes in energy price caps as a significant factor affecting inflation and monetary policy decisions. Analysts have reacted with surprise, noting Glapinski's unpredictability and the need for lower borrowing costs in a struggling economy. The zloty appreciated while government bond yields rose in response to the new outlook.