Economists at the National Bank raised their forecast for average inflation in 2024 to 3.8% and 5.25% in 2025. The reasons behind this included the return of VAT on energy, higher wages driven by pay deals for government employees, and minimum wage increases.

“In the coming quarters, the consumer price growth is likely to increase and will be running above the NBP inflation target, driven by raised energy prices,” the bank’s economists said.

The bank sees inflation rising to 5% for the month of December.

“Alongside that, over the medium term, demand pressure in the economy will be stimulated by wage growth stemming from wage increases in the public sector,” the report continued, adding that wage inflation in the first quarter reached 14%.

The NBP lowered its forecast for economic growth to 3% in 2024, down from 3.5%.

“Against this background,” the report said,” the Monetary Policy Council of the National Bank of Poland decided to keep the NBP interest rates unchanged in June,” at 5.75%. This is the level at which they judge interest rates are “conducive to meeting the NBP inflation target of 2.5% inflation (±1 percentage point) in the medium term.”

Adam Glapiński, the head of NBP, said on Thursday, it is “obvious that we can forget about cutting interest rates.”

Reacting to this, Piotr Popławski, an economist from ING, said: “The governor is now suggesting that the earliest cuts could be expected in 2026. At previous meetings, had talked about keeping rates unchanged in 2025.”