NextFin News - Poland’s economic growth is now more vulnerable to the escalating conflict in the Middle East than its inflation trajectory, according to Henryk Wnorowski, a member of the National Bank of Poland’s Monetary Policy Council (MPC). Speaking on Thursday, Wnorowski suggested that while geopolitical tensions typically stoke price pressures, the primary threat to the Polish economy currently lies in the potential for a significant slowdown in activity. This shift in focus comes as the central bank maintains a restrictive stance, keeping interest rates at 5.75% despite a recent uptick in consumer prices.
Wnorowski, an academic economist who joined the MPC in 2022, has historically aligned with the council’s more cautious, "wait-and-see" faction. His recent comments reflect a nuanced pivot; while he acknowledges that higher inflation "hardens" the council's resolve to keep rates elevated, he remains skeptical that the current inflationary pulse justifies further tightening. His position is often viewed as a bellwether for the council’s center-ground, balancing the hawkish demands for price stability against the risks of stifling a fragile post-pandemic recovery. However, his view that growth risks now outweigh inflation risks is not yet a consensus among Polish policymakers, many of whom remain laser-focused on bringing CPI back to the 2.5% target.
The data provides a complicated backdrop for this policy debate. Poland’s inflation rate surprised to the upside in April, driven largely by the partial withdrawal of government energy subsidies and a rebound in food prices. Yet, the broader economic engine is showing signs of friction. Industrial production and retail sales have fluctuated, and the shadow of the Middle East conflict threatens to disrupt global trade routes and dampen European demand—Poland’s primary export market. Wnorowski’s assessment hinges on the idea that the "supply-side shock" of the conflict will act as a tax on consumption and investment, potentially cooling the economy faster than the central bank’s interest rate hikes alone.
This perspective is currently a minority view within the broader market. Most sell-side analysts, including those at ING and Millennium, expect the MPC to maintain its hawkish rhetoric well into the second half of 2026. They argue that with wages still growing at double-digit rates, the risk of "second-round effects" on inflation remains too high to prioritize growth concerns. The divergence between Wnorowski’s caution and the market’s expectation of a "higher-for-longer" regime highlights the uncertainty facing the National Bank of Poland. If the geopolitical situation stabilizes without a major energy price spike, the council may find itself over-tightened in a slowing economy.
The path forward for Polish interest rates remains tethered to the July inflation report, which will provide the first comprehensive look at the impact of energy price changes. While Wnorowski’s comments suggest a growing sensitivity to the downside risks of growth, the council as a whole has shown little appetite for a pivot. The central bank’s primary challenge will be navigating this "geopolitical tax" on growth without allowing inflation expectations to become unanchored. For now, the 5.75% benchmark rate appears to be a floor, with any talk of cuts likely deferred until the growth risks Wnorowski fears become more visible in the hard data.
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