Poland's central bank will maintain current interest rates until the conflict in Iran concludes, according to Monetary Policy Council member Henryk Wnorowski. The bank recently cut its benchmark rate by 25 basis points to 3.75% but warned that further reductions are now off the table. Wnorowski emphasized that the duration of the conflict will complicate assessments of inflation and economic impacts.

Policymakers based this week's rate cut partly on concerns that maintaining rates would signal distress to financial markets already rattled by Middle East tensions. The council had considered two additional quarter-point cuts this year, but Wnorowski significantly reduced expectations for reaching the 3.25%-3.5% target rate for 2026 that media had recently reported. Central Bank Governor Adam Glapinski noted that the Middle East conflict has blurred the outlook for Polish borrowing costs.

The bank remains vigilant about potential inflation spikes from global energy price increases, which could push inflation above the 2.5% target and necessitate rate hikes. January data showed consumer price growth slowing to 2.2%, the lowest in nearly two years. Wnorowski stated that the wait-and-see approach is now more justified than in previous months.