Poland’s Central Bank Governor Sees Rate Cuts Coming Soon

Polish central bank Governor Adam Glapinski said policymakers may soon cut interest rates after adopting a “dovish” stance in a shock about-face that sent the zloty and Warsaw-listed stocks tumbling.

Author of the article:

Bloomberg News

Agnieszka Barteczko and Maciej Martewicz

Published Apr 03, 2025  •  2 minute read

uu5p3zd5oyao2{l9drd7rwb)_media_dl_1.png National Bank of Poland

(Bloomberg) — Polish central bank Governor Adam Glapinski said policymakers may soon cut interest rates after adopting a “dovish” stance in a shock about-face that sent the zloty and Warsaw-listed stocks tumbling. 

Article content

Article content

Speaking a day after the Monetary Policy Council left the benchmark at 5.75%, Glapinski said slower-than-expected inflation in the first quarter triggered a “radical shift” in policymakers’ outlook. 

Article content

“This moment is nearing,” Glapinski told reporters at a news conference on Thursday, when asked about the possible timing of rate cuts, adding that he may personally file a motion to reduce borrowing costs. 

The scale of monetary easing may exceed 100 basis points this year, Glapinski said, if the government prevents energy prices from rising.

Glapinski has come under growing political pressure to ease policy after the central bank has kept rates unchanged since October 2023, even as policymakers in the Czech Republic and Hungary reduced rates. Only last month, he was adamant that no cuts should be expected any time soon.

The zloty lost as much as 1.3%, its steepest drop in almost a year, and was trading at 4.2202 against the euro as of 4:31 p.m. in Warsaw. The country’s WIG20 stock index dropped 4%, one of the worst-performing major global equity gauges on Thursday, with bank shares falling most.

Glapinski’s comments followed another dovish inflation readout, with price growth staying steady at 4.9% in March and undershooting the central bank’s forecast that said it would peak at 5.4% in the first quarter. The central bank’s medium-term target limits inflation to 2.5%, with a 1 percentage point tolerance band on either end. 

Article content

The governor said he needed another set of soft data to confirm the trend of lower inflation before backing rate cuts, which he said could come “in May or in any following month.” 

Glapinski’s U-turn isn’t the first time he has wrong-footed financial markets. Before parliamentary elections in 2023 he unexpectedly slashed rates, sending the zloty into a tailspin. In the past months, he’s ignored inflation that undershot economist expectations, until Thursday’s shift.

The governor said that he favors one-off rate adjustments, instead of a series of rate cuts, and said that both quarter- and half-point changes were possible, depending on incoming inflation data. He said that interest rates may fall as low as 3.5% next year, if price growth stays benign.

“We don’t recall that Governor Glapinski has ever given a more unambiguous announcement of further actions,” said Bank Pekao SA economists, led by Ernest Pytlarczyk. “The comments sounded as if this sequence was set to start in May.”

—With assistance from Konrad Krasuski.

(Updates with more quotes from Glapinski and analysts, updates markets.)

Article content