The unexpected Iran conflict did not discourage the dovish members of Poland's central bank

Poland's Central Bank Resumes Rate Cuts

The Monetary Policy Council (MPC) has resumed its cycle of adjusting interest rates, reducing the National Bank of Poland's (NBP) reference rate by 25 basis points to 3.75%. This move was widely anticipated and officially confirmed. Notably, the guidance for a rate cut in March was issued prior to the escalation of tensions in Iran, which subsequently drove up energy commodity prices and heightened the threat of an adverse supply shock in the energy sector.

Despite these developments, the MPC focused on the pronounced downward trend in core inflation, considering the energy market volatility primarily a concern for overall consumer price inflation. The Council's accompanying statement further elaborates on their decision-making process.