Poland Interest Rate

The National Bank of Poland kept its benchmark reference rate steady for the sixth meeting at 5.75% in April, in line with the market expectations, as the regulator preserved its cautious approach amid uncertain inflation trajectory. The lombard and deposit rate were also held at 6.25% and 5.25%, respectively. The country's inflation slowed sharply to 1.9% in March 2024, remaining within the 1.5-3.5% target range for the second month. However, the upside risks to price pressures in the second half of the year persisted since the country's pro-EU ruling coalition restored the VAT rate on basic food products to 5% from 0 as of April 1, lifting a temporary measure put in place in February 2022. According to projections, this increase will lead to an acceleration in inflation by nearly 1%. Furthermore, the government is yet to decide on its lock on energy prices for households, which remain frozen until the end of June.