WARSAW (Reuters) -The National Bank of Poland (NBP) left interest rates unchanged on Wednesday, in line with expectations, and said inflation should return to target after the energy price shock fades.
Inflation in September was 4.9%, well above the upper limit of the central bank's inflation target of 2.5% plus or minus one percentage point, and is expected to rise further at the turn of the year.
However, in the medium term, the central bank expects CPI to return to target.
"When the effects of the energy price increase fade - amid the current NBP interest rates level - inflation should return to the medium-term target," the Monetary Policy Council (MPC) said in a statement.
"The inflation developments over the medium term will be also affected by further fiscal and regulatory policy measures, the pace of economic recovery in Poland and labour market conditions."
The Polish MPC has kept interest rates unchanged since October 2023, with the reference rate at 5.75%.
Meanwhile, other central banks in the region are in the process of easing monetary policy - interest rates are falling in Hungary and the Czech Republic, and recently the U.S. Fed and European Central Bank have also lowered costs of borrowing.
The market is now waiting for Thursday's press conference with Governor Adam Glapinski.
In September, Glapinski reiterated that the central bank did not expect inflation to return to target before 2026. He said it could, however, start weighing monetary easing earlier, with the March 2025 inflation projection being a key moment.
"The MPC did not surprise and did not change interest rates. There is a long way to go before cuts are resumed, complicated by, among other things, the increase in core inflation," Bank Pekao analysts wrote on social media platform X.
(Reporting by Pawel Florkiewicz, Karol Badohal, Anna Wlodarczak-Semczuk;Editing by Gareth Jones)
