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May inflation may halt the NBP rate hike in June
The MPC waits to decide, but the market is already talking about July
An unexpected drop in food prices may ease pressure on the Monetary Policy Council and weaken expectations of an interest rate hike. In June, it is almost certain that NBP interest rates will remain unchanged. The key meeting may not come until July.
After the March cut, the NBP reference rate stands at 3.5%. That is the lowest level since April 2022. Following the end of the easing cycle in March 2026, monetary authorities are now signaling caution and prefer to wait for more data.
For a while, the financial market was even pricing in the possibility of rate hikes in the second half of 2026. The reason was rising uncertainty after the attacks on Iran and concerns about oil prices. In recent days, however, those expectations have eased somewhat.
Preliminary May inflation data brought an important signal. The CPI (Consumer Price Index) fell by 0.3% month on month, although the market had expected an increase. Annual inflation declined from 3.2% to 3.1%. This reading was largely driven by a 1.0% monthly drop in food prices.
That change may now work in favor of the monetary doves, meaning supporters of a looser monetary policy. Earlier, some RPP members suggested that inflation moving above 3.5% could open the door to a rate hike.
After the May reading, that risk has clearly diminished. As economists point out, a central bank usually does not tighten policy in response to a one-off supply shock, such as a spike in oil prices. Such a shock lifts inflation, but at the same time it weakens GDP growth.
Why July may matter more than June
At the June meeting, the RPP is unlikely to change anything. More attention is on July, when the Council will receive a new inflation projection prepared by NBP analysts. Such a document shows how the central bank sees the path of prices and economic growth in the coming quarters.
By then, the outcome of the June ECB (European Central Bank) meeting may also be known. If the euro area shifts its stance, that will provide an additional reference point for RPP members. The situation on the oil market and the scale of any supply disruptions also matter.
Economists note that at the current inflation level and after the latest rate cuts, room for further monetary easing is limited. On the other hand, after the May data it will be harder to argue that a quick tightening is needed.
In practice, that means the June decision may be quiet, but July will show whether the RPP stays on hold or starts to seriously consider a change in course. For borrowers and for those exchanging currencies, this is an important signal, because RPP decisions affect the złoty and expectations for EUR/PLN and USD/PLN.
The official RPP statement is due at 16:00, and further clues may come from a press conference by NBP President Adam Glapiński.
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