Poland's inflation rate slowed in June and came in below analysts' forecasts, reinforcing market expectations that interest rates will remain unchanged and could even fall this year.
Inflation (PLCFY=ECI), (PLCFM=ECI) eased to 2.5% year-on-year in June, from 3.1% in May, the statistics office said on Wednesday based on a flash estimate, as energy and food prices fell.
That put the rate squarely in the middle of the central bank's inflation target 1.5-3.5%.
Analysts polled by Reuters had expected the rate to rise to 2.7%. Month-on-month, prices fell by 0.5% compared to the expected decline of 0.2%.
The main factor contributing to the slowdown in CPI was falling fuel prices – by 7.4% month-on-month – despite the reinstatement of the higher excise tax rates in effect at the beginning of the year. June also saw another decline in food prices.
"Inflation is in the central bank's target and there is no need for interest rate hikes. The NBP's (central bank's) July projection should confirm this," ING analysts wrote in a commentary.
"Interest rates will remain unchanged in July. The market may start pricing in cuts in the second half of 2026."
The next meeting of the Monetary Policy Council will be held on July 7-8, when the central bank will also release its latest forecasts for inflation and economic growth.
In June, the Monetary Policy Council kept its benchmark rate (PLINTR=ECI) at 3.75% for the third month in a row.
Central bank Governor Adam Glapinski said that interest rates are currently at an appropriate level, and slowing inflation reduces the likelihood of monetary tightening.