Economic news

• INTEREST RATES: Two MPC members have chipped in over the past few weeks. According to Ireneusz Dąbrowski, the probability of a rate cut during this week’s MPC meeting is 50%. Dąbrowski would personally be more amenable to pause, though. He still sees some additional room (50 bps) for monetary easing in the first half of the year. Dąbrowski’s comments are somewhat more dovish than we anticipated. Joanna Tyrowicz, the MPC’s most hawkish member, is somewhat puzzled by the behavior of core inflation, which should not have declined as much as it did, contrary to forecasts from NBP’s models. She attributed the undershot to several factors such as strong currency, cheap imports from China and shifts in consumption structure. Nevertheless, Tyrowicz would still like to see higher rates, as evidenced by her failed +125 bps motion in November. Finally, vacancy in the Council was filled – President Karol Nawrocki nominated Marcin Zarzecki, a statistician, sociologist, and Nawrocki’s former colleague from the Institute of National Remembrance. It seems that the new member will follow the consensus within the Council.  
• INFLATION: 2025 ended with below-target inflation as the CPI dropped from 2.5 to 2.4% yoy. Core inflation was likely stable at 2.7-2.8% in December. Inflation averaged 3.6% in 2025, matching 2024 average. However, the trajectories could not be more different – 2024 started with low inflation and was marked by acceleration. 2025 started with above-target inflation but was dominated by dovish surprises along a downward trajectory. We believe that inflation would decline considerably in 2026 and remain in the lower half of the target band for a major part of the year. This forecast is somewhat lower than the consensus. Case in point: according to the results of the latest Survey of Profesional Forecasters published by the NBP inflation is expected to decline to 2.6% in 2026 and 2.5% in 2027. 
• SENTIMENT:  Business sentiment deteriorated slightly towards the end of the year, as evidenced in Statistics Poland sentiment indices (especially the one for industry) and the manufacturing PMI for Poland. The latter declined from 49.1 to 48,5 pts. 
• LABOR MARKET: According to the preliminary estimate, unemployment rate rose from 5.6% in November to 5.7% in December. This increase is fully in line with seasonal patterns and matches the consensus of forecasts.  
• CREDIT:  New mortgage lending declined from PLN 8.6 bn in October to 7.4 bn in November, while consumer loan originations stayed at an elevated pace of PLN 11.6 bn. BIK data on mortgage applications (up by 41% yoy in December) suggest that mortgage lending remained buoyant towards the end of the year, however. 
• DEBT: The Ministry of Finance published its quarterly supply plans. The Ministry plans to conduct eight debt sales in Q1, with a total supply of PLN 75-100 bn, and one switching auction. Three of those will be organized in January (9th, 22nd and 28th). This year’s first auction (on the 9th) appears to be a success – the Ministry sold PLN 12 bn worth of POLGBs and attracted a whopping PLN 22.3 bn in demand. In addition, the MoF issued EUR 3.25 bn of 5- and 10-year eurobonds. The spread to mid-swap EUR IRS rates (43 and 83 bps, respectively) was at 6-year lows. Following these sales, the Ministry has now financed 26% of this year’s gross borrowing needs. Finally, Bank Gospodarstwa Krajowego also issued its quarterly supply plan, which consists of five tenders, the first of which will be organized today.  

Financial market update

Given the lull in data from core markets, this week on the domestic market may be readily influenced by domestic events, specifically Thursday's press conference by National Bank of Poland’s Chair A. Glapiński. Although the outcome of Wednesday's meeting is a foregone conclusion (the policy rate will remain at 4.00%), the Chairman may provide new information about when rate cuts will resume. In particular, any indication of a resumption of cuts before March will be interpreted as a dovish signal (weakening the PLN and triggering purchases on the FI market), while if the NBP Chair mentions a resumption of cuts only in April, the markets shall react hawkishly. However, we do not expect A. Glapiński to speculate on the target interest rate level (which is a pity, as such speculation could help determine the number of cuts this year). We are entering this week in Poland with a fairly sharp depreciation of the dollar, dictated by EURUSD trades, as USDPLN is losing about PLN 0.02, falling towards 3.60. EURPLN remains stable at around 4.21. There is also little happening on the FI market and at the stock exchange; in particular, the 10-year bond is unsuccessfully testing resistance at 5.15, while the WIG20 is opening above 3260 points. Unless the MPC's communication changes significantly during Thursday's conference, we believe that the zloty will remain under the influence of core market factors, POLGB yields will remain stable, and the WIG will return to slight gains.