Loosening energy prices could extend the period in which inflation remains above target, the Monetary Policy Council said.
“In the Council’s assessment, inflation will remain well above the NBP inflation target in the coming quarters, which will be driven by the effects of the past increase in energy prices, as well as increases in excise duty rates and the prices of government-regulated services. At the same time, core inflation is also likely to remain high. Loosening energy prices in the second half of 2025 could help extend the period in which inflation remains above the inflation target,” said the statement after the Monetary Policy Council meeting.
The Council noted that the impact of increased inflation on inflation expectations and wage pressures remains a factor of uncertainty, especially in light of the expected economic recovery and low unemployment.
According to the Monetary Policy Council, core inflation remains at high levels, mainly due to high service price dynamics. The high dynamics of wages contribute to this, including due to the increase in wages in the public sector.
What next with inflation in Poland? MPC prediction
In the medium term, inflation – at the current level of NBP interest rates and under the conditions of an expected gradual decline in wage dynamics – should return to the NBP target – the Council said. “Further fiscal and regulatory policy actions will also have an impact on inflation developments over the medium term,” the report said.
When assessing last year’s economic situation, the Council noted that GDP growth increased in the fourth quarter of 2024.
“In November 2024, retail sales growth accelerated, with negative annual dynamics in industrial, construction and assembly production. There is still low unemployment and a large number of working people in the labor market, although employment in the business sector was lower in November 2024 than a year earlier. At the same time, wage dynamics remain high,” we read.
Interest rates
The Council maintains that the current interest rate level is conducive to achieving the medium-term inflation target.
“The NBP will continue to take all necessary measures to ensure macroeconomic and financial stability, including, above all, a sustainable return of inflation to the NBP’s medium-term inflation target. The NBP could intervene in the foreign exchange market,” it was reported. .
Further Council decisions will depend on incoming information on the outlook for inflation and economic activity, it was summarized.
Source: Do Rzeczy

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