Poland's central bank has signalled that a reduction in interest rates is now more probable than an increase in 2026, marking a notable shift in its forward guidance. The Narodowy Bank Polski (NBP) said that the balance of risks has tilted towards a cut, as inflation continues to moderate and economic growth remains subdued. The announcement comes ahead of the bank's next rate decision in March.
The NBP has held its benchmark rate at 5.75 per cent since October 2023, after a series of cuts brought it down from a peak of 6.75 per cent. However, Governor Adam Glapiński had previously warned that rate cuts would not be possible until 2026. The latest commentary suggests the bank is now preparing markets for a potential easing cycle, with a cut seen as more likely than a rise.
Analysts at ING Bank Śląski noted that the shift reflects a combination of lower domestic inflation, a stronger zloty, and a more cautious outlook for the Polish economy. 'The NBP is acknowledging that the disinflation process is more advanced than previously thought,' they said. 'This opens the door for a rate cut in the first half of 2026, assuming no external shocks.'
For UK investors, the development is significant because Polish government bonds are a staple in many emerging market debt funds held by British pension schemes and retail investors. Lower rates typically boost bond prices, which could improve returns for holders of Polish debt. However, a rate cut could also weaken the zloty, potentially reducing the sterling value of those returns.
The Polish central bank's stance mirrors a broader trend in Central Europe. The Czech National Bank has already cut rates several times, while the Hungarian central bank is expected to follow suit later this year. The divergence from the European Central Bank, which remains cautious, highlights the varying inflation dynamics across the region.
Source: Narodowy Bank Polski, ING Bank Śląski