Poland held rates at 3.75 percent, leaning on a fuel windfall tax to curb inflation

The Monetary Policy Council of the National Bank of Poland left its reference rate at 3.75% on Wednesday 7 October 2026. Reuters, in copy carried by MarketScreener, reported that the Council held and flagged inflation and global risks. Bloomberg headlined the same decision as a seventh month without a change and attributed the room to manoeuvre to a cut in fuel prices. What makes the decision worth examining is not the rate. It is that the Council held while the headline number was outside its tolerance band, and that the reason it could do so was a tax statute signed six days earlier. Statistics Poland's flash estimate, published on 30 September, put consumer prices 4.0% above September 2025 and 0.7% above August 2026. The bank's target is 2.5% with a tolerance of one percentage point either side, so 4.0% sits above the 3.5% ceiling.

The decision and the number behind it

The reference rate has stood at 3.75% since March 2026. Bloomberg reported the September meeting, on 9 September, as a hold taken with inflation at a fourteen-month high, and recorded an earlier hold on 8 July as the fourth in sequence. The 7 October decision therefore extends a pause that has now run through a period in which the headline rate rose rather than fell. The National Bank of Poland publishes each decision through its Monetary Policy Council page.

Statistics Poland's flash release gives only the aggregate: a price index of 104.0 against September 2025 and 100.7 against August 2026. The detailed breakdown by category follows later in the month. The flash figure is enough to establish the position the Council was in. A reading of 4.0% is the first time since mid-2025, on Bloomberg's account of the August figure of 3.4%, that the series has moved this far up the band, and it crosses the upper bound rather than approaching it.

A tax doing the work of a rate

The instrument the Council is relying on is a levy on refiners. Reuters, in wire copy carried by Global Banking & Finance, set out the structure: a 60% charge on fuel-sales revenue exceeding the 2025 baseline by 20%, applied to the period from March to December 2026, with expected proceeds of 3.8 to 4 billion zloty. Prime Minister Donald Tusk said the money would be used to bring down prices at the pump. Finance Minister Andrzej Domański said prices would fall by 1.2 to 1.3 zloty a litre as early as that weekend, and that he wanted the programme to run at least until the end of the year.

This is the third fiscal intervention in the Polish fuel market in 2026. Reuters reported that an earlier price-cap programme, running from March to July, cost roughly 4.7 billion zloty, and that the government cut the VAT rate on fuel in late August. The base for the new levy is visible in company results: Reuters noted that Orlen's second-quarter 2026 revenue was up by nearly 26% year on year and its LIFO EBITDA by more than 54%, on fuel price increases Reuters linked to market turmoil around the conflict with Iran.

The sequencing matters for the monetary question. The pump-price reduction the Council is counting on takes effect in October, after the 4.0% September print. The disinflation is therefore prospective and administrative. It is a transfer from refiners' margins to retail prices, financed by a charge that stops at the end of December 2026 unless extended.

The constitutional contingency

The law exists only because President Karol Nawrocki changed position. Reuters reported that he refused to sign the government's earlier version in July and referred it to the Constitutional Tribunal instead, with the presidential office arguing that it breached the constitutional prohibition on retroactive taxation. The government resubmitted the measure, and Reuters reported that Nawrocki signed the revised bill on the evening of Thursday 1 October, with publication following on Friday 2 October.

The mechanics of Polish cohabitation explain why the government could not simply proceed without him. Under Article 122 of the Constitution, a bill returned by the President goes back to the Sejm, which can pass it again only by a three-fifths majority with at least half of the statutory number of deputies voting. Mr Tusk's coalition does not command that margin. Every fiscal measure in this area consequently runs through the presidency, and the July referral shows the Tribunal remains available as a route of challenge even after signature.

For the Council, this means the input to its inflation path is not a market development but a statute whose constitutionality has been formally questioned by the head of state who signed it. If the Tribunal were to strike the levy, the financing for the pump-price reduction would go with it.

What the hold defers

Bloomberg reported that the respite is expected to be short, with derivatives pricing and some economists pointing to a rise in borrowing costs as soon as November, when the bank's next set of projections becomes available. That is the standard pattern: the Council has tended to wait for a projection round before moving, and November is the next one.

The harder problem is 2027. A price cut delivered in October 2026 enters the year-on-year comparison as a favourable base effect for a few months and then reverses. The levy expires in December 2026, the earlier price cap has already ended, and the VAT reduction dates from late August. Each of these lowers measured inflation now and raises it later, unless renewed. Renewal requires the presidency again.

Read against the reference rate, the 7 October decision is a hold on 3.75%. Read against the band, it is a decision not to respond to a 4.0% print because a tax is expected to bring the print down. The distinction will matter in November, when the projection arrives and the fuel measures are closer to their end dates than to their start.

Sources

• Reuters via MarketScreener — Polish central bank holds rates, flags inflation and global risks
• Bloomberg — Poland Keeps Rates Unchanged as Fuel Price Cap Curbs Inflation
• Statistics Poland — Flash estimate of the consumer price index in September 2026
• National Bank of Poland — Decisions of the Monetary Policy Council
• Reuters via Global Banking & Finance — Polish president says he signed windfall tax bill
• Reuters via Global Banking & Finance — Poland to revive windfall tax on oil firms, use proceeds to cut fuel prices
• Bloomberg — Poland to Hold Interest Rates With Inflation at 14-Month High
• Bloomberg — Poland Holds Rates for Fourth Month as Inflation Risks Decline
• Sejm of the Republic of Poland — Constitution of the Republic of Poland, Article 122