Polish MPC’s Dabrowski Sees 50/50 Chance of Rate Cut in 2025

(Bloomberg) -- Poland is just as likely to keep interest rates unchanged this year due to lingering risks to price stability as it is to reduce borrowing costs, policymaker Ireneusz Dabrowski said. 

“Given the number and scale of unknowns that may affect inflation levels, I believe that interest rate cuts this year are as likely as leaving rates unchanged throughout 2025,” Dabrowski told Bloomberg.

His comments come amid increasing pressure on the central bank to revise its long held steady-rates outlook after a batch of indicators showed that inflation pressure, along with economic prospects, are cooling more than anticipated by the monetary authority.

Dabrowski, a Monetary Policy Council member who has a track record of voting with Governor Adam Glapinski, said that he is particularly worried about central bank projections showing a slight rebound in inflation in 2027 after price growth falls to the 2.5% target at the end of 2026.

He downplayed softer inflation readouts for January and February, attributing them to the seasonal adjustments by the statistics office and said that the key to the timing of rate cuts will be the central bank’s next economic forecast in July.

“If, in the July projection, the rate of decline in inflation is faster than we currently assume, and the inflation rate does not pick up in 2027, I believe a rate cut in the third quarter is possible,” Dabrowski said. 

He called himself a supporter a rate-cut cycle, rather than single moves, adding that: “it is even better to delay the first rate cut decision” to ensure that it marks the start of a series of reductions. 

Dabrowski said that chances of a rate increase this year are “close to zero” but can’t be completely ruled out. Asked about calls from business groups to reduce borrowing costs, which have stayed on hold since late 2023, Dabrowski said there aren’t many such appeals and that the MPC’s role is not to fuel the economy. 

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