EY Sees Poland Inflation Hitting 3.5% as Rates Stay Unchanged Through 2027

Q: Will Poland's central bank defy market expectations by keeping interest rates high, risking its economic growth to tame inflation?

Yes. The balance of evidence suggests Poland’s central bank is more likely to keep rates unchanged for longer than markets expect, rather than deliver near-term cuts. Inflation has moved back above the National Bank of Poland’s 2.5% target, with headline CPI at 3.1% in May and core inflation at 3.0%. EY expects inflation to approach 3.5% by year-end, driven by fuel costs, broader energy spillovers from the Middle East conflict, and later pressure from the EU’s expanded carbon market and higher fertiliser costs feeding into food prices. That matters because the central bank is likely to focus less on one-off fuel moves and more on whether they spread into core prices and expectations. EY now expects the Monetary Policy Council to leave rates unchanged through end-2026 and into 2027, putting it on the hawkish end of forecasts. ING has also pointed to a more hawkish tone from the NBP governor, while some investors have even started pricing the risk of hikes rather than cuts. That contrasts with broader market consensus still looking for at least one cut this year. The growth trade-off is real, but not yet severe enough to force easing. Poland’s economy is still expected to grow around 3.5% in 2026, supported by consumption and EU-funded investment, with unemployment near 3%. Higher rates could weigh on demand if the energy shock deepens, but for now policymakers appear more concerned about preventing a supply shock from becoming entrenched inflation.

2 articles · Updated · Warsaw Business Journal · Jun 11

Poland’s headline inflation rose to 3.1% in May from 2.1% in February, prompting EY to forecast price growth will approach 3.5% by year-end.
Fuel costs drove the latest jump, while core inflation also climbed to 3.0% from 2.5%, signaling broader underlying price pressure.
EY says elevated energy prices linked to the Middle East conflict and the planned expansion of the EU carbon trading scheme will keep inflation under pressure beyond the near term.
That outlook leads EY to expect Poland’s Monetary Policy Council to hold interest rates steady through end-2026 and into 2027 before easing gradually.
The forecast is more hawkish than market consensus, which still expects at least one additional rate cut this year.