Poland's April wages data rule out scenario of rate cut in June (interview)
April's wages data rule out the scenario of an interest rate cut at the June meeting of Poland's Monetary Policy Council, PKO BP chief economist Piotr Bujak assessed in an interview with PAP Biznes. If further data raises doubts about the persistence and strength of the downward trend in inflation, the MPC may delay the next rate cut longer than until July.
"Surprisingly strong wage growth is indirectly a good signal on the health of the economy. Alongside the good GDP data for the first quarter and the surprisingly good industrial output data for April, it is an indicator that allows us to believe that the Polish economy will indeed grow this year clearly above 3 percent," Bujak told PAP Biznes.
"And this is already a factor that leads central bankers to be cautious in further reducing the degree of monetary policy restrictiveness, while wage growth in particular - as a potentially inflationary factor - is probably the most important warning signal," he added.
Bujak pointed out that it is worth noting that although wage growth in April turned out to be stronger than expected, it is lower compared to the double-digit growth rate of the previous year.
"We had a similar surprise - concerning from the point of view of the inflation outlook - in January this year, and then there were months when wage growth slowed down significantly, more strongly than expected," the economist recalled.
"We will therefore have to wait until next months' data to assess the trend. Nevertheless, surely this reading alone means that there is no question of another interest rate cut at the MPC's June meeting, and some financial institutions and market participants were expecting such a move. These data seem to rule out such a scenario," he added.
On Wednesday, Poland's stats office GUS reported that average gross wages in the business sector in April 2025 rose by 9.3 percent year on year, following an increase of 7.7 percent in March. The reading was significantly higher than the analysts’ forecasts, as they had expected a growth of 8.1 percent year on year.
The chief economist of PKO BP indicated in an interview with PAP Biznes that if further data raise doubts about the durability and strength of the downward trend in inflation, the Monetary Policy Council may delay the next interest rate cut longer than until July.
"If the set of data for April (because we still need to know, among other things, the retail sales data) and then the data for May look similar, if they raise doubts about the durability and strength of the downward trend in inflation, it is easy to imagine that the rather conservative-minded Monetary Policy Council would delay the next interest rate cut longer than until July, giving itself more time," Bujak assessed.
"After the July meeting, there is still an August holiday break in the Council's meetings, so it seems that this would be a sufficiently long period and a sufficiently large set of data to then - with more certainty about the inflation outlook - make a decision on a possible, renewed rate cut," he added.
The chief economist at Poland's largest lender by assets PKO BP stressed that such a scenario has to be taken into account, reiterating that all depends on further data.
"At the moment we can say, based on the information we already have, regardless of what other data we will see by the June MPC meeting, that there will not be another cut at the next meeting," Bujak said.
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