WARSAW (Reuters) -The Polish government will extend the limit on electricity prices through the fourth quarter, Energy Minister Milosz Motyka said on Friday, which could remove one source of
Poland Plans to Maintain Energy Price Freeze, Fueling Rate Cut Speculation
WARSAW (Reuters) -The Polish government will extend the cap on electricity prices through the fourth quarter, Energy Minister Milosz Motyka said on Friday, which could remove one inflation risk and boosted market bets on an interest rate cut.
Power prices would be frozen at 500 zloty ($137) per megawatt hour in the final three months of the year, Motyka said.
Poland's electricity price cap for households expires in October and the central bank has pointed to this as an inflation risk factor and a source of uncertainty.
Last month, President Karol Nawrocki vetoed a bill meant to ease rules for building onshore wind farms, which included regulations extending a price freeze. He submitted a draft bill to parliament that included just the government's energy freeze proposal.
The government has now prepared a new bill freezing prices in the fourth quarter and included a wage-dependent subsidy to household heating bills starting this year. Motyka said it would pass parliament this month, adding he did not think further energy price freezing would be necessary.
"In our opinion, there will be no need to freeze prices because we expect energy prices to fall below 500 zlotys per MWh," he told journalists.
Market expectations for interest rate cuts within three months increased slightly following Motyka's statement.
"The market is becoming convinced that this reduction can take place," Santander Bank Polska economist Piotr Bielski said.
He did not rule out a rate cut in October, but expected rate setters to opt to wait for the central bank's next inflation projection, due in November.
Warsaw's utility index outperformed the market, gaining 3.5%.
Erste Securities utilities analyst Petr Bartek attributed this to Motyka's comments on electricity prices in 2026 as wholesale market prices fall.
"This would be a clear positive move for the sector," he said.
($1 = 3.6405 zlotys)
(Reporting by Marek Strzelecki, Anna Wlodarczak-Semczuk, Karol Badohal in Warsaw and Julia Kotowska in Gdansk; Editing by Emelia Sithole-Matarise and Alex Richardson)
