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Interest rates unchanged in December. Government decisions crucial for inflation
The MPC may keep rates unchanged in December, but energy price decisions will matter more
In December, the MPC may leave NBP interest rates unchanged, despite inflationary pressure continuing to build. That was the view expressed by Council member Wiesław Janczyk, who said the key to the next decisions will be government rulings on administered prices for heat, gas and fuel.
Janczyk wrote in response to questions from PAP Biznes that the final data passed on by the state administration at the turn of the year will provide an answer of fundamental importance for inflation and interest rates in Q1 2027. This is mainly about prices for energy, heat, gas and fuel.
In his view, November’s decision to keep rates unchanged was also possible because current information on commodity prices, the geopolitical situation and global inflation did not force a change in stance. The preliminary October CPI reading of 3,5 proc., published by Statistics Poland (GUS), also helped.
Janczyk said inflation moving above the upper edge of the NBP’s target band, as shown in the November projection, should not yet be seen as a lasting threat. He pointed out that real interest rates remain positive, and that a pre-emptive hike is not justified at present if the government keeps administered prices at a similar level.
According to the MPC member, there are also factors in the Polish economy that could curb price growth. He pointed to slower GDP growth, easing wage pressure, a decline in employment in the business sector, the end of spending from KPO funds, and a low core inflation reading, estimated at below 3 proc. in October.
On the other hand, Janczyk described the 12,5 proc. y/y increase in M3 money supply in September as worrying. He also noted that markets expect further rate hikes from the Fed and the ECB. In his view, a more accommodative stance by the Council could return if the government tightened fiscal policy more strongly and slowed the pace of public debt growth.
Janczyk said the global backdrop also matters. Geopolitical stabilization could ease pressure on oil, gas, commodity and food prices. The recent weakening of the złoty, he noted, improves the competitiveness of Polish exports and is not yet anything unusual.
NBP President Adam Glapiński said last week that the mood within the Council is now more hawkish, meaning more inclined to fight inflation more aggressively. He added that the MPC usually does not raise rates in December, but if inflation risks keep rising, the Council is ready to act.
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