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(Bloomberg) — Polish inflation rebounded after energy prices soared from the Iran war, in what may prompt caution from central bankers after their bold interest rate cut just days after the start of hostilities.
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The consumer price index rose an annual 3% in March, the highest level since July, from 2.1% the previous month, according to preliminary data released on Tuesday. That compares with a median forecast of 3.2% in a Bloomberg survey.
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The data is poised to shift the National Bank of Poland to a wait-and-see approach after a quarter-point cut to the main interest rate to 3.75% on March 4, which made it the first central bank to ease monetary policy since the US and Israeli attack on Iran in late February.
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Inflation has surged around the world as a result, pushing central bankers to pivot toward policy tightening to anchor price expectations. European Central Bank President Christine Lagarde has vowed to act decisively and swiftly if needed, though officials also say they won’t rush to raise interest rates. Investors are pricing in at least two ECB hikes by the end of the year, with a move possible as soon as April’s meeting.
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In Poland, rate-setters including Ludwik Kotecki, Henryk Wnorowski and Wieslaw Janczyk have ruled out further monetary easing steps as long as the Iran war continues. Another policymaker, Gabriela Maslowska, said this month that Poland may consider rate hikes only if price pressures rise for a sustained period.
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Before the Iran war, Poland had seen its inflation gradually slow from almost 5% at the start of 2025, allowing the Monetary Policy Council to reduce the key rate by a total of 200 basis points since May.
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Prime Minister Donald Tusk announced last week a plan to reduce the value-added tax and excise levies on surging fuel prices as well as impose a cap on retail prices that will be set daily in line with wholesale levels.
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The fuel price cap, effective as of Tuesday, should prevent the Monetary Policy Council from raising rates, as food price growth remains slow, according to Marta Petka-Zagajewska, an economist at PKO Bank Polski SA.
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—With assistance from Konrad Krasuski.
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English (US)