Poland cuts household gas prices, raising chances of lower interest rates

WARSAW (Reuters) -Poland's energy market regulator has cut the gas prices that wholesaler PGNiG Obrot Detaliczny charges to households and vulnerable users including hospitals and schools by 14.8%, increasing the chance of more interest rate cuts.

Gas distribution fees remain unchanged, which will result in average gas bills falling by between 8.1% and 11% depending on the volume of consumption, the regulator, URE, said on Thursday.

Gas prices for households are set by the regulator and have a major impact on inflation. Uncertainty over energy prices has been the main factor behind central bank's reluctance to cut interest rates faster.

As a result of the cut in gas prices, inflation may fall close to 2.5%, the mid-point of the central bank's target range, in July, and the central bank may cut rates further, ING economists said on X following the announcement.

"Our current scenario assuming 75 basis points of cuts by the end of the year and to 3.75% in 2026 is the minimum scenario," they said. The rate is currently 5.25%.

(Reporting by Marek Strzelecki and Anna Wlodarczak-Semczuk. Editing by Mark Potter)