The full publication is available in a PDF file Download here

Detailed forecasts and data can be found in an Excel file Download here

Macroeconomic scenario

Economic growth

Another revision to national accounts, this time to quarterly data for the first half of the year. This prompted us to raise this year’s GDP forecasts yet again and relatively strong Q3 outturn will push this over the finish line, which is painted at 4%. Yes, we are returning to our original forecast for 2026. Next year, GDP will slow down to 2.9%.

Inflation

The anticipated second-round effects, stemming from higher fuel prices, remain virtually invisible within the broad basket of core goods and services. We are left wondering what lies behind the Polish economy’s remarkable resilience, particularly as core inflation has been rising steadily in other major European economies. Nevertheless, we maintain our assumption that a more pronounced pass-through of higher energy costs will eventually emerge in Poland over the coming months. This risk is compounded by the fact that, in the current phase of the crisis, other energy sources - including natural gas and electricity - are also becoming more expensive. We anticipate that higher energy costs will be reflected in household tariffs for 2027 approved by the Energy Regulatory Office (URE). At the same time, food prices are becoming an increasingly potent source of price pressure, which will significantly drive up inflation in 2027.

Average annual inflation will exceed 3% in 2026 and will be notably higher next year. According to our forecasts, CPI inflation will remain above the upper limit of the NBP permissible deviation range for the next year.

Labour market

September was a quiet month for the Polish labour market. All key indicators were in line with expectations: wage growth remained close to 6% yoy, employment stayed at -0.8% yoy, and the unemployment rate held at 5.8% for the fourth consecutive month. October should be somewhat more eventful due to statistical distortions in wage data (discussed later in the report) and a potential one-tenth increase in employment growth. At the same time, higher inflation risks have led us to revise our wage growth forecast for next year slightly higher, from 5.9% to 6.3%. In our view, weak labour demand will not fully offset rising wage pressures in an environment of inflation running around 5%.

Monetary policy

The shocking CPI print for October buried the idea of a rate hike in November and this year altogether, for that matter. However, inflation is still set to rise and the external environment is conductive to rate hikes. In addition, the recent depreciation in the PLN exposes the risks of running too low of an interest rate disparity vis-à-vis core markets. Rate hikes remain our baseline scenario for 2027.

Financial markets

We’re in the endgame now

The past month has been very favorable for bondholders, and October turned out to be a mirror image of September. Long-term bond yields are roughly where they were in mid-September. Why did bonds rally? The extreme overselling of this asset class, the stabilization of the oil market, and concerns about the state of the stock market following the recent declines in tech stocks. It seems we are in the endgame. The U.S. midterm elections are a major turning point for the conflict in the Persian Gulf – either Iran loses the reason to delay reaching an agreement, or the United States lose its reason to avoid escalating the conflict. Meanwhile, the sell-off in tech stocks (and all those linked to the AI boom) was fueled by a loss of confidence in the financial side of the boom. Investors and market observers are now asking themselves a simple question: “Is that it?” If the bursting of the dot-com bubble serves as any guide here, then yes, this is what it might look like, and the downward trend in stock market indices will be punctuated by periods of consolidation and speculation about a possible rebound.

Local politics is back

The escalation of the conflict surrounding the Constitutional Court has reminded investors that political risk has not entirely disappeared from Poland’s investment landscape. The result has been a weakening of the zloty. The arguments that the same applies to bonds and stocks are weaker, and the situation is less clear-cut. Nevertheless, it is worth keeping in mind the context in which this factor emerged: uncertainty regarding the direction of monetary and fiscal policy, downgrades to Poland’s credit rating, the dispute between the parliamentary majority and the National Bank of Poland (NBP), and the slowly approaching parliamentary elections in 2027. A substantial amount of foreign capital is in the line of fire – the cumulative net inflow of foreign capital since the beginning of 2024 amounts to just over 4% of GDP. It mattered when it flowed in, and it would matter if it were to flow out. It is unlikely that this will happen right now. However, we believe that holders of Polish assets will demand an additional risk premium.

This additional premium means, ceteris paribus, that the NBP must maintain higher interest rates. The “ceteris paribus” condition makes a big difference here – the latest inflation data have dashed hopes for interest rate hikes in the short term, but the market reacted to them much more mildly than analysts did – one MPC rate hike has been removed from the future rate path, not the entire cycle. The yield curve also remains very steep across all relevant segments. With all the above caveats in mind, we can venture to say that the bond market has already weathered the worst: borrowing needs should decline slightly, and from a technical standpoint, some fixed-income benchmarks look attractive. An election year comes with its traditional risks, which may dampen investor appetite, but there is still some time before certain decisions are made (e.g., regarding energy price freezes).

Selected macro releases due this month

• Industrial production (our forecast October: 1.1% yoy) Working days are in the driving seat in October, which means a slowdown in industrial output last month. In addition, September was an extremely strong month for industry, which creates sort of a high base for the next. All in all we expect output to have slowed down to 1.1% yoy.
• Retail sales (our forecast October: 2.6% yoy) The reintroduction of tax relief for fuels revived fuel sales and the coming of autumn weather likely boosted clothing and footwear sales. This is too little to offset the effect of higher trading day count and high base in food sales.  
• CPI inflation rate (our forecast October: 3.5% yoy) According to the flash reading, October’s CPI fell significantly more than expected - to 3.5% yoy from 4.1% the previous month. What makes this surprise particularly interesting is that it was entirely driven by core inflation - rather than accelerating, it dropped well below 3% yoy. The preliminary estimate does not yet specify which categories accounted for this outcome. Other categories were far more predictable. The resumption of a fuel-price-reduction program (CPN) led to a 10% drop in prices at gas stations, shaving approximately 0.7 percentage points off the CPI inflation figure. Meanwhile, energy prices continued to rise sharply, increasing by 1.6% mom in October. Food prices are also on the rise, though the pace of growth remains moderate (+0.3% mom).
• Wages in the enterprise sector (our forecast October: 6.6% yoy) In our view, wage growth accelerated markedly in October. However, this is not  a sign of a lasting shift in the wage trend stemming from an increase in wage pressures due to higher inflation. Instead, the explanation is considerably more mundane: a favourable base effect from a year earlier. In October 2025, wage growth slowed to 6.6% yoy from 7.5% yoy in the previous month, largely due to a one-off (in our opinion) fluctuation in the transport sector. Contrary to the market consensus, we assume that the same unidentified factor dragging the wages down in that sector did not reoccur this year. As a result, we expect a temporary acceleration in wage growth.
• Unemployment rate (our forecast October: 5.8%) The unemployment rate has remained at 5.8% for several months, and we expect it to stay unchanged in October. The main risk is a temporary rise to 5.9% due to labour force estimates, as we have seen in recent preliminary readings, although such increases were not subsequently confirmed by official StatOffice data.
• Current account balance (our forecast September: EUR -3200 mn) The Middle East conflict and the resulting significant surge in prices of imported fuels and energy commodities have pushed the trade balance back towards a deeper deficit (due to lower terms-of-trade: import prices higher than export prices). Since then, monthly trade deficit has increased by an average of at least EUR 0.5 bn. The increase in the value of both exports and imports is also linked to a rapid expansion in investments in infrastructure to support artificial intelligence (reflected in higher trade volumes for computer hardware).
• NBP interest rate (our forecast November: 3.75%) November hike is off the table and the date of the first rate hike was pushed to Q1’27.