Polish Inflation Jumps, Pushing Likely Rate Cuts Into 2025

Poland’s inflation accelerated for a sixth month running in September, hitting a fresh 2024 high and cementing expectations for no interest rate cuts until next year.

(Bloomberg) — Poland’s inflation accelerated for a sixth month running in September, hitting a fresh 2024 high and cementing expectations for no interest rate cuts until next year.

The inflation rate rose to 4.9% from a year earlier, compared with 4.3% in August, according to preliminary figures released on Monday. The data matched the median forecast in a Bloomberg survey of 32 economists.

Consumer prices have accelerated in recent months, fueled by reduced energy subsidies and a higher tax rate on food. September also saw a base-effect increase, with last year’s government mandated cuts in the prices of medicine falling out of the year-on-year index.

“We’re behind in the fight against inflation,” said economists at ING Bank Slaski led by Rafal Benecki. “Rate cuts in Poland will come much later than abroad, such a situation usually means a strong zloty.”

The Polish currency traded 0.1% weaker against the euro on Monday, reducing its third-quarter advance to 0.8%, still one of the best performers among emerging-market peers. 

The reading comes two days before the central bank’s monthly decision on interest rates. Many policymakers in their latest comments have upheld views that rates will remain on hold this year, but suggested that cuts could be discussed early next year. Even central bank Governor Adam Glapinski softened his stance earlier in September, saying that monetary easing may be possible around the middle of next year.

“That was a noticeable change,” Capital Economics analysts, including Nicholas Farr, wrote in a note. Still, September’s inflation will “probably rule out a further dovish shift in communications,” they added.

(Updates with chart, additional comments and zloty reaction.)