Economic news

• INTEREST RATES: The MPC held rates unchanged, as expected. The press release offered no new clues regarding the future direction of monetary policy, The NBP governor’ press conference had some dovish undertones, at least compared to expectations, but reinforced our view that the MPC was heading for rate hikes (a more detailed comment on the Governor’s appearance can be found in the next section). Two MPC members went on the wires afterwards, L. Kotecki and H. Wnorowski. Both sounded quite hawkish, signaling that there would be willing to support the motion for a rate hike in November, provided that the next projection shows inflation remaining above target and noticeable second-round effects. 
• GDP: Statistics Poland revised national accounts data for 2025. According to the latest estimate, GDP rose by 3.8% in 2025 (prev. 3.6%). The revision can be traced back to stronger domestic demand, which was cushioned by higher imports. This, in turn, is a result of both household consumption and investment riding faster than previously believed. In general, this confirms the initial conclusion that 2025 growth was driven by household consumption and that the investment cycle was ramping up already. There is no reason to alter 2026 forecasts after this revision. 
• BUDGET: The Minister of Finance and the Economy Andrzej Domański informed that the government will be working towards cutting the fiscal deficit. He also said that warnings from ratings agencies are not ignored.
• LABOR MARKET: Unemployment rate held steady in September, at 5.8%, the Ministry of Family, Labor and Social Policy said. This is a preliminary figure, but so far it tracks with consensus forecast.

NBP ready to hike, not necessarily in November

The Monetary Policy Council has come to terms with the prospect of interest rate hikes in Poland, but still hopes it will be able to avoid them – that is the conclusion we draw from yesterday’s press conference by Adam Glapiński. The tone of the conference was generally hawkish. The NBP president began by pointing out what has changed for the worse regarding Poland’s inflation outlook:

• First, the energy shock caused by the war in the Middle East can no longer be treated as temporary. High fuel and energy prices are here to stay, and the MPC can no longer wait for them to fall on their own.
• Second, food prices have stopped falling on a year-over-year basis, and we can expect them to start rising significantly and drive up inflation next year. There are many reasons for this: expensive fertilizers and unfavorable weather conditions (El Niño). 
• Third, the economy is accelerating. A global AI investment boom is underway, which represents a separate source of cost pressure distinct from the energy shock. In Poland, this is compounded by loose fiscal policy and a wave of EU funds (RRF and SAFE). The MPC may have reasonable concerns that this will be a factor intensifying inflationary pressure.
• Fourth, major central banks are raising interest rates. In September, the Fed followed the ECB’s lead. This is putting pressure on the NBP to join this trend. The longer it delays, the greater the pressure will be for the zloty to weaken (it’s becoming increasingly more profitable to hold capital abroad than in Poland). And a weaker zloty also translates into inflationary pressure.

However, not all the news is negative. So far, the rise in fuel and energy prices has not generated second-round effects – that is, it has not significantly driven up the prices of other goods and services (with the exception of organized tourism and transportation, which are directly dependent on fuel prices). In short, core inflation remains under control for now, and in September it most likely even fell from 3.3% to 3.2% yoy. This is the MPC’s final argument for holding off on raising interest rates. Although the NBP Governor also mentioned the fuel tax relief program as a factor lowering inflation, he simultaneously noted that the government cannot continue this program indefinitely and will most likely end it at some point next year, perhaps as early as January 1st .

Adam Glapiński’s message yesterday, however, was unambiguous: the Monetary Policy Council is ready to act immediately if the data show that high energy costs are spilling over into broad categories of goods in the inflation basket.

NBP reference rate – Pekao forecast and market pricing (%)

Source: NBP, LSEG, Pekao Research

Will the Monetary Policy Council (RPP) see the effects of the second round as early as November? No – core inflation won’t have risen significantly by then. Does this mean we’re retracting our forecast that Poland will raise interest rates in November? No, not at all. In November, the National Bank of Poland (NBP) will present a new inflation projection for Poland, and it will look roughly like the chart below – with inflation fluctuating between 3.5% and even 5% year-over-year. By waiting for high core inflation readings before raising rates, MPC members risk reacting too late and exacerbating the problem. It’s also possible that the financial market – specifically, a weaker zloty – will force them to act.

CPI and its components – Pekao forecast (%)

Source: Statistics Poland, Pekao Research

Financial markets update

The lull in the core markets did not translate into improved sentiment in emerging markets, though it would be inaccurate to describe the situation as a significant sell-off. Nevertheless, the zloty generally weakened. EUR/PLN moved from just under 4.38 to 4.39, and USD/PLN from 3.91 to 3.93. This week, we can expect the markets to test further resistance levels. The 4.40 level for EUR/PLN is particularly tempting. Sellers also dominated the domestic debt market, although the yield on the Polish 10-year bond ultimately rose only slightly, to 6.35%. Here, too, we should not expect a pause. Investors have good reasons to be bearish on the Polish bond market: a high deficit, a lack of urgency regarding interest rate hikes, and a host of geopolitical risks. In the coming week, we will most likely see the sell-off in the Polish bond market continue.