Economic news

• RATES: The Monetary Policy Council left interest rates unchanged at its July meeting, keeping the reference rate at 3.75%. The post-meeting statement offered no new guidance regarding the future policy path, instead focusing on the new inflation projection. However, the tone of A. Glapiński’s press conference was distinctly dovish. The NBP Governor even suggested that he could submit a motion for an interest rate cut as early as September – likely the only one this year. He did not rule out further cuts next year. He also noted that other MPC members appeared inclined towards rate cuts, although perhaps not as soon as he would. We discuss the details of the press conference later in this report. The NBP revised its inflation forecasts for 2026–2027 upwards by around 0.5 pp., while slightly lowering its 2028 forecast (by 0.1 pp.). GDP growth projections were trimmed marginally – by 0.1–0.2 pp. – for 2026–2027. The projection itself is not as supportive of rate cuts as the current rhetoric from the MPC. Core inflation is expected to exceed 3% in the second half of 2026 and remain elevated for roughly a year thereafter. Headline CPI inflation, meanwhile, is projected to return sustainably to the midpoint of the inflation target only at the end of next year.
• MPC-OPINION: Cautious remarks from MPC members. Henryk Wnorowski argued that the case for interest rate cuts in 2026 remains weak and that, even if a cut were to materialize, it would likely be limited to one move. In his view, the recent weakening of the zloty is not a cause for concern. MPC member Ludwik Kotecki expressed a similar stance, noting that there are substantive arguments in favor of another rate cut after the summer, but also numerous inflation risks. Consequently, he sees no urgency and believes it is too early to declare support or opposition for additional rate cuts later this year.
• DATA: The registered unemployment rate declined by 0.1 pp., to 5.8% in June, according to the preliminary estimate released by the Ministry of Family, Labour and Social Policy. The reading was in line with our forecast and the consensus.
• MF-AUCTION: Strong demand for Polish government securities remains in place. The Ministry of Finance sold PLN 4 bn of 50-week Treasury bills against demand of PLN 6.44 bn, with an average yield of 3.75%.
• FORECASTS: The International Monetary Fund projects that Poland’s GDP will grow by 3.4% in 2026, 0.1 pp. higher than in its April forecast round, and by 2.4% in 2027, unchanged from the previous forecast, according to the latest edition of the IMF’s World Economic Outlook. The IMF is somewhat more pessimistic than we are regarding Poland’s medium-term growth prospects.

NBP’s Dovish Pivot

Paraphrasing a former Polish Prime Minister, Thursday’s press conference by the NBP Governor should be judged by how it ended – and it ended on a distinctly dovish note. Adam Glapiński even suggested that the Monetary Policy Council (MPC) could vote on a first 25 bps rate cut as early as its September meeting. Should we therefore expect the easing cycle to resume this autumn? In this note, we take a closer look at the details of the press conference to assess the likely path of interest rates in Poland.

CPI inflation and forecast against the NBP inflation target tolerance band (% yoy)

Source: Statistics Poland (GUS), Pekao Research

The core message of A. Glapiński’s remarks could be summarized in two words: “equilibrium path” The NBP Governor portrayed Poland as a resilient economy growing at a balanced pace, with inflation on target and no significant inflationary pressures on the horizon. In particular, he emphasized that:

• Inflation returned to the inflation target in June (2.5% yoy), while the oil price shock related to the Iran War was not sufficient to push annual inflation outside the NBP’s tolerance band (see chart above). Importantly, the inflationary impulse from hydrocarbon markets did not spill over broadly across the economy, remaining largely confined to the most energy-intensive services, namely transport and tourism. Moreover, it is unlikely to spread further, as oil prices have already fallen below USD 80 per barrel and futures curves are converging towards USD 70 per barrel.
• Economic growth is expected to exceed 3.5% in 2026 before moderating towards 3% in 2027. This implies that the output gap should remain broadly closed, meaning that economic activity is unlikely to generate significant inflationary pressures. This is a key difference between Poland in 2026 and in 2022. Back then, the oil and war-related shocks hit an economy already overheated by the post-pandemic demand rebound, ultimately resulting in elevated inflation. Such a scenario is unlikely to be repeated this time.

Governor Glapiński also pointed to several risks to price stability: first, instability in the Strait of Hormuz; second, the possibility of stronger-than-expected economic activity; third, the labour market - which, in his view, is unlikely to be inflationary in the coming quarters; and fourth, expansionary fiscal policy. Nevertheless, the overall picture emerging from the Governor’s remarks was one of a broadly balanced economy. It was a picture that would allow the MPC to make decisions without haste - consistent with our forecast that monetary easing would not begin until mid-2027.

The dovish turn came only during the Q&A session with journalists. The NBP Governor indicated that, provided the economic environment does not materially change, a rate cut later this year is a possibility. Specifically, at the September MPC meeting, Adam Glapiński himself could submit a motion for a 25 bps rate cut. At the same time, he cautioned that such a proposal may not receive majority support within the Council and stressed that more than one rate cut this year is effectively off the table. 

Additionally, July’s Inflation Report presented a scenario for the Polish economy that leaves the door open for the MPC to resume interest rate cuts. Both in nominal terms (with inflation at target and entering a declining trend from 2027 onward) and in real terms (balanced economic growth broadly in line with potential output and a gradually weakening labour market), there appear to be no factors on the horizon that would provide the Council with a compelling argument against further monetary easing. Does this mean that interest rate forecasts should be revised to reflect an earlier easing cycle?

1Y WIBOR and the 2Y swap rate (IRS)

Source: Macrobond, Pekao Research

In our view, the conclusions from the press conference cannot be ignored. We now know that the NBP Governor clearly has an appetite for rate cuts. That said, a September cut is far from a done deal. It is worth recalling that even before the outbreak of Iran War, we expected the policy rate to decline to 3.25% this year - but under a scenario in which inflation would fall well below target (1.9% yoy annual average).

Under our current CPI forecast (2.7% yoy annual average), we believe that more substantial rate cuts this year could prove premature, particularly as core inflation is likely to remain around 3%. Nevertheless, we recognize the risk that the scenario outlined in our last week’s Monthly Economic Update, which assumed two rate cuts in the second half of 2027, could materialize earlier than previously expected. How early, that will depend on incoming inflation data.

Financial markets update

A quiet end to the week. The market’s adjustment to a more dovish MPC now appears largely complete. Both the 2-year and 5-year swap rates have stabilised around the policy rate, with deviations from that level remaining relatively small, suggesting a broadly balanced market pricing with a slight bias towards near-term rate cuts. At the same time, yields on Polish government bonds edged lower, resulting in a modest narrowing of swap spreads. The most interesting developments, however, took place in the FX market. Friday began with another sharp weakening of the zloty, with EUR/PLN rising from 4.33 to 4.35. Yet the rally in EUR/PLN ended there. The proximity of an important resistance level (4.37) provides part of the explanation, though not a complete one—the exchange rate could still have risen further without immediately threatening that threshold. Another factor is the cumulative size of the move already observed. Given the current volatility in FX markets, investors may be increasingly inclined to take profits after a move of several to a dozen figures, depending on their entry point and positioning. With the repricing towards a more dovish MPC largely behind us, the scope for further weakening of the zloty appears limited. For now, 4.35 seems to define the upper bound of the trading range. Even the escalation of tensions in the Middle East and higher oil prices have done little to undermine market sentiment. Overall, it appears that EUR/PLN has shifted into a somewhat higher trading range. Domestic factors are unlikely to drive significant moves in the coming weeks. The macroeconomic calendar contains only second-tier data releases, while July is typically not conducive to public comments from MPC members. Against this backdrop, the most noteworthy event on the domestic agenda will be Wednesday’s government bond auction.