ING economists on interest rate cuts in November: over 50% chance

ING Bank economists estimate the probability of another interest rate cut in November at “significantly above 50 percent.” – the bank said in a comment to the Thursday conference of the President of the NBP, Adam Glapiński.

On Wednesday, the Monetary Policy Council reduced interest rates by 25 basis points. The main NBP interest rate, the reference rate, dropped from 4.75%. up to 4.5 percent The latest interest rate cut was the fourth this year. Since the beginning of the year, central bank rates have decreased by a total of 1.25 percentage points.

Economists estimate that the president of the National Bank of Poland, Adam Glapiński, at the Thursday conference, justified the October decision of the Monetary Policy Council to reduce interest rates by 25 basis points with the continued low inflation. As he emphasized, in September, for the third time in a row, inflation was close to the NBP target and remains within the range of permissible deviations. He added that the Monetary Policy Council estimates that the inflation outlook for the coming months has improved, and thanks to the extension of the energy price freeze until the end of 2025, inflation should remain around 3% by the end of the year.

The general tone of the conference – as assessed by economists – was traditionally hawkish, but the president of the NBP left the door open to further easing of monetary policy. The final decision on the November rate cut will depend on the incoming macroeconomic data and the new inflation projection.

During the conference, the president of the NBP pointed out that despite the reduction in interest rates, the central bank pursues a prudent monetary policy. He listed several main risks that may increase inflation in the medium term: core inflation remaining above the target, the risk of energy price increases after tariffs are unfreezed in 2026 and the ETS2 system is introduced in 2027, strong demand and consumption growth, increased wage growth and expansionary fiscal policy.

Glapiński estimated that the expansion of the EU emission trading system (ETS2) may increase inflation in Poland by up to 2 percentage points in 2027, which would make Poland one of the EU countries most affected by this solution. He was critical of this policy, emphasizing that he did not expect the European Union to withdraw it.

The President of the NBP noted that economic growth remains solid and consumption is growing dynamically, which is a pro-inflation factor. At the same time, he pointed out that the government is taking steps towards fiscal tightening and limiting expenditure, which limits price pressure in the medium term.

According to Glapiński, the external environment favors further reduction of inflation, although this is the result of weaker economic conditions in the world and stagnation in Europe. He noted that decisions of the Monetary Policy Council are made “from meeting to meeting”, and most members see room for further cautious cuts of 25 basis points. (PAP)

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