Economic news

• MPC-OPINION: If the November projection shows inflation becoming entrenched above 4%, the MPC will have to respond - said MPC member Ludwik Kotecki. In our view, CPI inflation will indeed exceed that threshold in the final quarter of this year, although we do not expect the MPC to respond with rate hikes.
• RATING: During a webinar for journalists and analysts, Heiko Peters, Moody’s lead analyst for Poland, elaborated on the rationale behind the agency’s decision to downgrade Poland’s sovereign rating. The stable outlook attached to the new A3 rating assumes that, following next year’s parliamentary elections, political consensus will emerge in favour of stronger fiscal consolidation and the preservation of the current fiscal framework. The rating assessment is based on the expectation that the debt-to-GDP ratio will stabilise at 70-75%, supported by a degree of government-led fiscal adjustment.
• RETAIL SALES: Retail sales in constant prices increased by 3.8% yoy in August, below the market consensus of 4.5% yoy and little changed from July (3.9% yoy). However, this downside surprise should not be interpreted as a change in the underlying trend. Consumer spending remains robust, although part of the strength reflects additional fuel purchases related to the CPN programme. Adjusting for this effect, the trajectory of retail sales would likely resemble last year’s pattern more closely. We discussed these data in detail in a dedicated commentary following the release.
• LABOUR MARKET: Wage growth in the enterprise sector slowed to 5.6% yoy in August, significantly below the market consensus of 6.5% yoy. Meanwhile, employment declined by 0.8% yoy, in line with expectations. We discussed the details of the labour market data in our post-release commentary. The registered unemployment rate remained unchanged at 5.8% in August. Earlier, the Ministry of Family, Labour and Social Policy had estimated the rate at 5.9%. The number of registered unemployed increased to 909.5 thousand from 906.4 thousand in July.
• CONSTRUCTION: Construction and assembly output increased by 6.7% yoy in August, broadly in line with both consensus expectations and our forecast. As a result, the delays in the settlement of construction projects that had led to July’s unexpected decline in output (-2.3% yoy) were fully reversed. August also brought a strong increase in building permits issued (+17% yoy) and housing starts (+26% yoy).
• MPC POLICY: In the document “Monetary Policy Guidelines for 2027”, the Monetary Policy Council maintained the NBP’s existing monetary policy framework, reaffirming its commitment to an inflation-targeting regime centred on a 2.5% inflation target with a symmetric tolerance band of ±1 percentage point. According to the projections included in the document, inflation is expected to remain somewhat elevated in the second half of 2026, reflecting the withdrawal of regulatory measures in the fuel market. In 2027, however, average annual CPI inflation is projected to be lower than in 2026. The NBP expects GDP growth to remain close to 3.6% in 2026, before moderating in 2027. The projected slowdown is consistent with a gradual return of economic growth towards a more sustainable pace following this year's solid expansion.
• BOND AUCTION: The Ministry of Finance sold six bond series (NZ0928, OK0129, NZ0331, PS1031, DS1034 and DS0436) worth PLN 12bn at auction, against demand of PLN 22.5bn. At the supplementary auction, a further PLN 632m was raised through the sale of two additional bond series. Following the auction, around 79% of the government's gross borrowing needs for 2026, as defined in the Budget Act, have been funded.
• FORECASTS: The European Bank for Reconstruction and Development (EBRD) left its GDP growth forecasts for Poland unchanged at 3.5% in 2026 and 2.8% in 2027. According to the EBRD, the balance of risks is tilted towards weaker growth. The report’s authors also pointed to the risk of further fiscal loosening ahead of the 2027 elections.
• MONEY SUPPLY: Broad money supply (M3) increased by 11.3% yoy in August, broadly in line with the consensus forecast of 11.2% yoy. On a monthly basis, money supply rose by 0.8%.
• FOREIGNERS: The number of foreign nationals covered by the Social Insurance Institution (ZUS) increased to 1.355 million in August, including 911 thousand Ukrainian citizens. This represents an increase of more than 100 thousand compared with a year earlier.

Financial markets update

Polish financial markets are under the same forces that are shaping global markets, only to a greater extent. The themes remain familiar: persistent inflation, loose fiscal policy and market repricing towards a higher interest-rate path. In Poland, these factors are compounded by the MPC’s dovish stance, which contrasts increasingly sharply with the actions of other central banks. The result is straightforward: a weaker zloty and continued pressure on government bonds. We expect these trends to persist in the coming week. Although EUR/PLN retreated from the 4.40 level last week, we view this move as largely tactical in nature, reflecting short-term profit-taking rather than a change in the underlying trend. In our assessment, another wave of zloty weakness is likely to follow. Wednesday’s inflation release could prove the catalyst. We expect inflation to breach the symbolic 4% threshold, potentially reinforcing expectations of a prolonged period of elevated interest rates. That said, it would not take much for the zloty to weaken again and retest the 4.40 level. The international backdrop remains unfavourable for emerging-market currencies, while Poland stands out negatively within the region. Compared with its peers, it combines a more dovish central bank with a looser fiscal stance, a mix that is unlikely to provide support for either the currency or the government bond market.