May 2025 MPC meeting: Potential start of rate cuts

The May 2025 meeting of the Monetary Policy Council (MPC) is expected to be closely monitored by investors and economists as it may mark a shift toward monetary policy easing. Following a period of elevated interest rates, the MPC faces the possibility of initiating a cycle of rate cuts or implementing a one-off reduction.

Possible Interest Rate Cut in May

Analyst consensus suggests that the MPC may decide to cut interest rates at the May meeting, with a reduction of 0.5 percentage points seen as likely. Such a move would signal a strong adjustment while allowing the Council to monitor future inflation developments. Alternatively, a smaller cut of 0.25 percentage points may signal the beginning of a gradual easing cycle, with further reductions depending on the progress of disinflation and broader economic conditions.

Factors Supporting a Shift Toward Easing

Stabilizing inflation data, despite remaining above the inflation target, along with moderate economic growth and high real borrowing costs, are key arguments for adjusting monetary policy. In addition, decisions by major central banks to begin lowering rates are contributing factors, suggesting a broader trend away from the previous cycle of monetary tightening.

One-Time Adjustment or Broader Policy Shift?

If the MPC opts for a 0.5% cut, it could be viewed as a corrective measure to address an overly restrictive monetary stance. A 0.25% reduction, by contrast, might indicate the beginning of a gradual adjustment cycle, potentially targeting an interest rate level of 4.0–4.5% by the end of 2025.

Outlook

The outcome of the May meeting could represent an important signal for the direction of Polish monetary policy. Beyond the decision itself, attention will focus on the Council’s post-meeting communication, which may clarify whether further easing measures are being considered.

Author: Dawid Rog, Lendi expert