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Macroeconomic scenario

Economic growth

According to the preliminary estimate, GDP growth rose by 3.6% in 2025 and by at least 4% in the fourth quarter of the year. In our view we should get used to such figures in 2026. With roughly stable consumption growth, surge in investment spending (especially public investment) and accelerating global economy, it will be difficult not to expect economic growth to accelerate this year.

Inflation

Inflation returned to the NBP target faster than expected - at the end of 2025. However, the disinflation process in Poland is not yet complete, although the pace of disinflation will slow significantly in 2026. Core inflation is becoming less of a problem, but services inflation will remain significantly higher than goods inflation due to the "stickiness" of high labour costs. Stable prices of industrial and energy commodities kept inflationary pressures on goods low in 2025. This should not change much in 2026, and the growing share of cheap imports from China will also have a disinflationary impact. The food market also signals low price pressure. According to our forecasts, the average annual CPI in 2026 will reach 1.9%, significantly below the NBP projection and market consensus.

Labour market

The condition of Polish labour market remains stable. Employment growth has stayed at a steady level in recent months and ended the year with a slight, though anticipated, increase. The unemployment rate adjusted for seasonal effects has most likely remained unchanged over the past six months, although legislative changes introduced in June of last year introduce a degree of uncertainty in this assessment. Wage growth, meanwhile, continues on a decelerating trend, temporarily interrupted in our view by a one-off 8.5% reading in December. In our assessment, 2026 will bring a further slowdown in wage growth (to an annual average of 5.5%), stabilisation of the unemployment rate, and an apparent acceleration in employment growth, driven solely by the annual change in the StatOffice’s survey sample rather than underlying labour market fundamentals.

Monetary policy

As far as NBP forecasters eyes can see, inflation will remain low. The room to cut rates further is considerable and the MPC will use it by cutting rates by as much as 75 bps, starting with a March cut of 25 bps. This will bring the NBP’s reference rate to 3.25%. Nevertheless, the window for cutting rates will be closing in mid-year as inflation and core inflation bottom out. It will also be apparent that economic growth accelerates beyond what the NBP is forecasting.

Financial markets

Are low rates really within reach?

Have we ever mentioned that the consensus for 2026 was boring? Central banks were forecasted either to keep interest rates close to neutral or cut them to that level. To navigate the world of monetary policy was therefore to stare at the stars, or more specifically, at the star next to r (the neutral rate is r*). Nevertheless, the assumption that interest rates would stabilize at r* requires some additional assumptions about economic growth (that it will remain moderate) and inflation (that it will remain at or close to the target if it is not there now). In short, the consensus assumed that the major economies were in equilibrium, which may not necessarily be the case. To the list of consensus views, we must add a weak dollar, and we cannot dispel the unease from the analogy with the previous year (when the consensus called for strong dollar...).

The first month of the year gave a lot of points to those who believed that economic growth would accelerate this year. The direction of the surprises caught some market trades (dollar, rates) off guard. However, we get the impression that the changes in the scenario that the market is betting on so far are cosmetic. The market still expects Fed to cut rates, but instead of two full cuts, it is pricing in almost two full cuts (44 bp). The implied probability of rate hikes is zero and is probably too low.  

The rally in Polish assets continues

Poland continues to be in vogue: in January, we witnessed further appreciation of the zloty (with EUR-PLN falling briefly below 4.20 and USD-PLN below 3.50), declines in Treasury bond yields to multi-year lows, and further increases in the main indices of the Warsaw Stock Exchange. Although the upward correction of the dollar caused these trends to falter, the sensitivity of Polish assets to global factors remains low.

From direct conversations with foreign investors, we can conclude that the biggest (and perhaps only) concern relates to fiscal policy, but this is not a new one. In fact, from a market perspective, this story is more than a year old. Moreover, there are reasons to believe that the worst is already behind us in terms of fiscal policy: borrowing needs for this year are probably overestimated, the fiscal deficit peaked last year, and some of the market's borrowing needs will be substituted, for example, by SAFE loans. As a result, the crisis-level swap spreads (90-100 bp for the 10Y tenor) may simply reflect risks that are no longer materializing. If so, there is room for a decline in Treasury bond yields without a radical revaluation of the future path of NBP interest rates.

Selected macro releases due this month

• Industrial production (our forecast January: 0.7% yoy) Following the phenomenal December time comes for payback in the form of shorter working time and, in turn, production. These effects should bring output growth back towards ca. 1% yoy.
• Retail sales (our forecast January: 3.4% yoy) We expect retail sales to have slowed down due to lower number of trading days, high base effects in some categories (furniture and household appliances, others) and signals from alternative data sources that car and drugstore sales weakened in January.
• CPI inflation rate (our forecast January: 1.8% yoy) Due to the annual update of the consumer basket weights, the Central Statistical Office is not publishing a flash estimate of CPI for January and February. The first data for January will be released in the middle of this month – still using the old weights, but with the implementation of the new COICOP 2018 classification (which is not expected to bring significant changes to the headline indicator).
  We forecast that 2026 will begin with a significant decline in CPI to 1.8% yoy. This will be supported by the high reference base from the beginning of last year, persistently weak price pressure in the food sector, and falling fuel prices. New household energy tariffs will have the opposite effect, increasing energy prices by about 1% mom. Core inflation remains higher, but will also decline in January to approximately 2.5% yoy, although the beginning of the year is always a period of increased uncertainty – many industries then make one-off price updates to adapt to the prevailing economic situation.
• Wages in the enterprise sector (our forecast January: 6.4% yoy) Following the sharp acceleration in wage growth in December, we expect an equally pronounced slowdown in January. As a rule, these two months tend to offset each other due to the payment of various bonuses and awards in December and the resulting high base effect in January. Consequently, the stronger the monthly acceleration observed in December, the more pronounced the deceleration in January. We therefore expect wage growth to have eased to 6.4% yoy in January, from an impressive 8.6% in December.
• Unemployment rate (our forecast January: 6.0%) In December, the unemployment rate ceased to be affected by the consequences of legislative changes implemented in labour offices, and its fluctuations returned to “normal” patterns. On a seasonally adjusted basis, the rate remained unchanged in December, and in our view the same was the case in January. January, however, is typically associated with a strong seasonal increase in unemployment; therefore, stabilisation in s.a. terms should translate into a headline unemployment rate of 6.0%, compared with 5.7% in the previous month, i.e. without adjustment for seasonal factors.
• Current account balance (our forecast December: EUR -1365 mn) Poland's balance of payments is still dominated by deficits, both in the trade and the current account. Exports is recovering sluggishly, while imports continues to be driven by import-intensive private consumption and the strong zloty. We expect a seasonally increased trade deficit of close to EUR 2 bn in December. We will end 2025 with a current account deficit of 0.7% of GDP.
• NBP interest rate (our forecast March: 3.75%) The NBP governor was very dovish in January and other MPC members signaled that they were ready to entertain the idea of resuming rate cuts. The MPC did not cut today – perhaps strong wage growth in December tipped the scale.