Poland‘s central bank has opted to keep its benchmark interest rate unchanged at 5.75%, despite the ongoing economic pressures that continue to affect inflation. This decision aligns with the central bank’s cautious stance amid concerns that inflation could rise again, particularly due to factors like expiring energy price caps and the strengthening US dollar.

Inflation Concerns and Economic Outlook for 2025

The National Bank of Poland’s decision to hold rates steady follows the country’s year-on-year inflation rate, which remained at 4.7% in December 2024, consistent with November’s figures. The central bank’s reluctance to reduce rates stems from the risk that inflation could again escalate due to these various economic factors.

In December, key price categories saw mixed changes. Non-alcoholic beverages and food costs remained stable at 4.8%, while transport costs dropped at a slower pace, and tobacco and alcoholic drinks experienced a slight moderation in price increases. However, the cost of utilities and housing rose more quickly, contributing to inflationary pressures. Health costs also saw a slight increase.

Despite these challenges, Poland’s economy is projected to grow in 2025, with the European Commission forecasting a 3.6% increase in GDP, driven by private consumption and investment. Inflation, however, is expected to rise to 4.7%, a sharp increase from 2024’s 3.8%. The unemployment rate is anticipated to remain low at 2.8% for 2025.