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Polish central bank expects the inflation rate to reach target by 2026

The central bank of Poland has predicted that the inflation rate in Poland will reach the target range in the first quarter 2026. This is earlier than expected.

The following is a list of projected dates

The bank announced on Friday.

According to central bank forecasts from July, inflation is expected to reach 2.9% by the third quarter in 2025. It will then increase to 3.6% by the fourth quarter, and then drop to 3.5% at the beginning of 2026, the target inflation rate.

The pace of growth in prices will slow to just 2.1% by the end of the projection period, which is the fourth quarter of 2027.

"... Inflation in the CPI will be impacted by a weakening wage increase, and this will affect prices a little later due to market mechanisms.

The National Bank of Poland has set an inflation target of 2.5%, plus or minus a percentage point.

This week, the statistics office reported that annual inflation for June was 4.1%. This is slightly higher than a poll's forecast of 4.0% and up from the revised 4.0% for May.

The Monetary Policy Council's (MPC) decision to lower interest rates in July was a surprise for the markets. The National Bank of Poland governor did not exclude another rate cut in September.

According to the central bank's forecasts for July, Poland's GDP will grow faster in 2025 from 3.0% in 2020 to 3,6%.

The National Recovery and Resilience Plan and the 2021-2027 Financial Framework will provide a significant boost to the investment trajectory.

In 2026 the Polish economy will grow at a slower pace, namely 3.1%. This will then slow down to 2.5% in 2027.

The report stated that "the slowdown in the GDP growth in the year 2027 is largely due the assumption of the termination of the spending funds under the National Recovery and Resilience Plan."

The central bank stated that the projection was based on data available up to June 9, 2025. (Reporting and editing by Pawel Florkiewicz, Susan Fenton).

(source: Reuters)