Economic news

• PRICES: The December final inflation reading confirmed the flash estimate figures: CPI inflation in Poland stood at 2.4% yoy, while prices were unchanged on a month-on-month basis. Core inflation amounted to 2.7% yoy in December, the same level as in November. This was slightly below our expectations (2.8% yoy), given the details of the final inflation release. Inflationary pressure in Poland remains moderately low.
• RATES: As expected, the Monetary Policy Council (MPC) left interest rates unchanged at its first meeting of the year. The post-meeting statement was not materially altered. The Council reiterated that further decisions will depend on incoming data regarding inflation and economic growth prospects and again listed the traditional risk factors to the expected inflation path. The decision was followed by Thursday’s press conference by the NBP President which was distinctly dovish. It clearly prepared the ground for a rate cut next month. The NBP President Adam Glapiński repeatedly emphasized that the MPC does not need to wait for the March inflation report to implement another rate cut, nor does it need to rely on consensus forecasts. Moreover, he stressed that “data are coming in all the time” (in reference to the wait-and-see approach announced in December). The enumeration of inflation risk factors (demand pressure, a potential reversal of the downward trend in wage growth, and deep fiscal deficits) did not reflect genuine concerns about rising inflationary pressure. Much more attention was devoted to disinflationary factors, namely commodity prices and the impact of cheap imports from China. Adam Glapiński also noted that, in his view, the target level for the reference rate is 3.50%, while the target real rate is 1–1.5%. Taking into account the unequivocally dovish rhetoric of the conference and signals from the MPC, we are convinced that the next 25 bp interest rate cut will take place in February.
• MPC-OPINION: Ludwik Kotecki of the MPC assessed the existence of room for rapid rate cuts as obvious. In his view, given the favorable inflation outlook, the MPC will cut rates at the February meeting.
• DATA: Data on Poland’s balance of payments for November surprised on the downside—the current account balance stood at EUR -0.46 bn, while the trade balance recorded an even larger deficit, exceeding EUR 1 bn. Goods exports increased nominally by 2.7% yoy, while imports rose by 3.1% yoy. Once again, the sharp increase in imports was driven by a recorded rise in arms imports. In its commentary, the NBP devoted considerable attention to China and the fact that its impact on European—and Polish—foreign trade has increased significantly in recent periods: rising imports from China weaken intra-EU trade but also exert a disinflationary effect.
• DEBT: Retail bond sales in December amounted to PLN 5.35 bn, compared with PLN 5.1 bn in the previous month. In the full year 2025, the Ministry of Finance sold PLN 74.9 bn worth of retail bonds— the second-highest result on record after PLN 82.6 bn in 2024. Three-year bonds (37%) and one-year bonds (35%) accounted for the largest shares of total 2025 sales. Moreover, the Ministry of Finance is considering issuing bonds in JPY, CHF, and USD in the first months of 2026, following an issuance in EUR, while closely monitoring developments in the US dollar market after the Trump administration initiated an investigation into the Fed Chair, said Karol Czarnecki, Director of the Public Debt Department at the Ministry of Finance.
• FORECASTS: The World Bank raised its forecast for Poland’s economic growth in 2026 by 0.2 pp to 3.2% (compared with the previous forecast round from October), while maintaining its 2027 forecast at 2.9%. The World Bank’s projections are very cautious—in our forecasts, the Polish economy will grow by 4% in 2026.

Financial market update

The most important event of last week on the domestic market was the dovish press conference of NBP President A. Glapiński. It is difficult to see its effects on the fixed income markets (2-year yields / swaps did not react), but they are visible on the currency market. EUR/PLN broke out of consolidation around 4.21 and moved upwards. On Friday, it broke through 4.22 and does not look like it will interrupt its upward trend. We expect it to break through 4.23 in the coming days and may even try to test 4.24 (unlikely to be successful, though). Hence, last week’s moves were more about the balance of risks than the baseline scenario for PLN interest rates. The key question for the NBP is as follows: is 3.5% the terminal rate for Poland and are risks asymmetric. We believe that they are and last week’s events are convincing some investors of that too. In addition to the dovish MPC, the weaker zloty is also supported by a general increase in investor risk aversion (the recent escalation between the US and the EU) and a slightly stronger dollar. POLGB yields will continue their downward trend. The most important macro data published this week will be December's wage growth, which will show how much room for interest rate cuts can be expected in 2026.