The effects of the conflict in the Middle East have suspended interest rate cuts in Poland, but for now they are not serious enough to convince the majority in the Monetary Policy Council (MPC) to increase them. What is the mood in the Monetary Policy Council and how does this body assess the market situation? This is shown by the minutes of council meetings, which are revealed with a month's delay. On Friday, we learned the content of the document describing the meeting held on May 6, 2026.
“In the opinion of the majority of council members, in these conditions and in view of the uncertainty regarding the further development of the geopolitical situation and its impact on the economy, at the May meeting, it was justified to keep the NBP interest rates unchanged. Council members emphasized that further decisions would depend on the incoming information regarding the prospects for inflation and economic activity in Poland,” the document reads.
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It was indicated that these prospects are influenced by changes in the macroeconomic situation in the environment of the Polish economy, including changes in commodity prices and global inflation in the context of the geopolitical situation. The shape of fiscal policy and regulations on fuel prices, as well as changes in the dynamics of activity in the Polish economy and further developments in wage dynamics also remain risk factors for the inflation outlook.
There was also an opinion that the current level of NBP interest rates is too low.
The course of the discussion at the Monetary Policy Council. What about the conflict in the Middle East?
During the discussion at the meeting of the Monetary Policy Council, it was pointed out that the course of the armed conflict in the Middle East continued to affect the prospects for economic activity worldwide and the sentiment on international financial markets. It was emphasized that due to the war, oil prices were high and highly volatile. It was also noted that the scale of the increase in the prices of natural gas and hard coal on the European market in recent months was smaller than that of oil prices and that the level of the agricultural raw material price index was lower than a year ago.
Council members pointed out that as a result of the negative supply shock on the energy raw materials market, forecasts for the dynamics of economic activity in the euro area are lowered. This applies especially to Germany – Poland's main trading partner – which has been struggling with poor economic conditions for a long time, including the difficult situation on the energy market.
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Council members emphasized that the consequences of the armed conflict in the Middle East led to an increase in inflation in the euro zone to 3%. in April 2026. At the same time, some euro area countries recorded much higher dynamics of consumer prices.
It was noted that in many economies forecasts of average annual inflation for 2026 were also being raised, although for now to a limited extent. It was emphasized that in conditions of rising inflation, it was caused by a supply shock most central banks of developed economies have recently kept interest rates unchanged. It was also pointed out that the level of interest rates in major economies was currently much higher than at the time of the outbreak of the energy crisis related to Russian military aggression against Ukraine, which reduces the risk of a strong impact of the increase in fuel prices on medium-term inflation prospects.
The impact of the conflict in the Middle East on the Polish economy
When discussing the prospects for domestic economic activity throughout 2026, the Monetary Policy Council emphasized that it may be influenced by the course of the conflict in the Middle East, including its duration. Higher global prices of energy raw materials reduce the dynamics of real disposable income at the same time increase cost pressure in Poland. As a result, the growth paths of both domestic consumption and fixed capital expenditures may be lower. The increase in uncertainty works in the same direction.
Some council members believed that as a consequence GDP dynamics in 2026 will be lower than forecast at the beginning of the year. Other council members emphasized, however, that given the inflow of EU funds under the KPO program, a significant increase in investment expenditure, including public expenditure, should be expected.
During the discussion on the labor market, it was noted that the available data signaled a continuation of the current trends. It was noted that the pace of wage growth was gradually weakening. Some council members signaled the risk of a return of pressure to accelerate wage growth in the coming periods due to higher inflation.
When analyzing the situation on the credit market, attention was paid to: gradual increase in the annual dynamics of loans to households. During the discussion on inflation, it was pointed out that despite the supply shock and the related price increase, CPI inflation had so far remained at a level consistent with the NBP inflation target. It was emphasized that the higher annual inflation rate compared to the beginning of the year was primarily the result of the higher annual dynamics of fuel prices. Some Council members pointed out that regulatory actions – including reduced taxes on fuel – limited the increase in inflation. At the same time, it was noted that due to only a slight increase in coal prices – which has a significant contribution to electricity production in Poland – domestic electricity prices are relatively stable.
While discussing the inflation prospects, the council members emphasized that they were currently subject to considerable uncertainty, even in the short term. In this context, it was pointed out that inflation developments in the following months depended primarily on changes in fuel prices. These, in turn, will be strongly influenced by the further course of the conflict in the Middle East. At the same time, fuel prices in Poland will be influenced by the shape, scale and duration of fiscal and regulatory activities on this market.
Council members pointed out that – taking into account various scenarios regarding the level of crude oil prices and the government's protective measures regarding fuel prices – a further increase in inflation is possible in the coming months. Some members emphasized that, according to available forecasts, inflation excluding food and energy prices should remain within the range of deviations from the NBP target in subsequent periods. It was emphasized that in accordance with the latest forecasts of the International Monetary Fund, average annual inflation in 2026 should be below the upper limit for deviations from the NBP inflation target.
Referring to the medium-term inflation prospects, MPC members pointed out that higher fuel prices, on the one hand, increase the costs of enterprises, which may constitute an impulse to increase prices. However, on the other hand, the supply shock reduces the dynamics of real household income, which leads to lower inflation pressure.
Interest rates in Poland. The most important values
In May, the Monetary Policy Council decided to keep the NBP interest rates unchanged:
- reference rate – 3.75 percent
- lombard rate – 4.25 percent
- deposit rate – 3.25 percent
- rediscount rate of bills of exchange – 3.8 percent
- bill of exchange discount rate – 3.85 percent
