The MPC wants to continue to fight inflation. Here is the May discussion

In May, the Monetary Policy Council assessed that CPI could be significantly lower than previous forecasts, so it adjusted interest rates, but at the same time, the Council members stressed that it was necessary to continue pursuing monetary policy aimed at permanently reducing inflation to the NBP target - it was stated in the discussion report from the May meeting of the Monetary Policy Council.

"The majority of the Council members assessed that, taking into account the incoming information, including lower current and forecasted inflation, lower wage growth and weaker data on the economic situation, it was justified to adjust the level of NBP interest rates. The Council members indicated that further decisions of the Council would depend on incoming information on the outlook for inflation and economic activity. The uncertainty factor remains the development of demand pressure and the situation on the labour market in the coming quarters, the level of administered prices of energy carriers and further actions in the area of ​​fiscal policy. Another source of uncertainty is the development of inflation in the world, including due to changes in the trade policy of the main economies," it was written.

"Members of the Council stressed that in these circumstances it was necessary to continue to pursue monetary policy aimed at permanently reducing inflation to the NBP target," it added.

While discussing the outlook for inflation, Council members emphasised that, according to the latest forecasts, CPI inflation in 2025 may be significantly lower than indicated in the March projection.

Some Council members pointed out that, according to current forecasts, CPI inflation in Q3 2025 will be within the range of deviations from the inflation target. It was pointed out that market analysts' forecasts for 2025 had also decreased, and some Council members noted that economic sentiment studies signal a lower rate of growth of producers' own prices.

However, some Council members argued that in their view, inflation expectations of enterprises and households remained elevated.

An opinion has emerged that – given the elevated inflation, including core inflation, as well as high wage dynamics and the current formation of inflation expectations – the current level of NBP interest rates is too low to ensure a sustainable return of inflation to the target in the medium term.

The Monetary Policy Council lowered interest rates by 50 basis points in May, including the reference rate to 5.25 percent. (PAP Biznes)

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