Dovish comments from National Bank of Poland Governor Adam Glapiński have strengthened investor expectations of earlier interest-rate cuts in Poland. Markets have once again begun pricing in the possibility of monetary easing after the summer, pushing government bond yields lower and weakening the Polish zloty. Following the NBP governor’s press conference, the EUR/PLN exchange rate rose to around 4.33, while forward rate agreements once again began pointing to future rate reductions.
The Polish currency may remain under pressure, particularly if investors continue to expect the European Central Bank and the US Federal Reserve to maintain relatively restrictive monetary policies.
Glapiński Opens the Door to a Post-Summer Rate Cut
During the press conference, Glapiński described the members of Poland’s Monetary Policy Council as “cautious doves,” suggesting that the Council’s stance was gradually becoming more accommodative. He described himself as a less cautious and less easily startled dove.
The NBP governor said an interest-rate cut could still take place in 2026 and indicated that he might submit a proposal for a 25-basis-point reduction after the summer. He stressed, however, that this was his personal opinion and that there was no certainty the proposal would secure the support of a majority of MPC members.
At the same time, Glapiński ruled out the possibility of two rate cuts in 2026. He also suggested that other members of the Council could become less cautious about monetary easing by mid-2027.
His remarks increased the perceived probability of an earlier move. Nevertheless, markets are still not fully pricing in a rate reduction before the end of 2026. One reason is that inflation could accelerate more strongly later in the year than indicated by the central bank’s projection, partly because of tax changes affecting fuel prices.
Investors have also not yet priced in the full potential scale of monetary easing over the 2026–2027 period.
Inflation Remains Under Control, but Risks Persist
Glapiński described the current inflation situation as favourable. In his view, price growth could temporarily accelerate but should remain within the permitted range around the NBP’s 2.5% inflation target, which allows for deviations of one percentage point in either direction.
He identified energy costs, fiscal policy, the war in Ukraine and the conflict in the Middle East as the main risks to price stability. According to the NBP governor, wage growth should no longer be a significant source of inflationary pressure. Wage growth in Poland’s corporate sector has slowed markedly and is currently at its lowest level in five years.
Glapiński identified the condition of Poland’s public finances as the economy’s greatest weakness. A high fiscal deficit and elevated public spending could restrict the central bank’s room to ease monetary policy.
Middle East Conflict Remains a Key Risk
The situation in the Middle East, particularly around the Strait of Hormuz, remains an important source of uncertainty. The partial restoration of shipping traffic initially caused oil prices to fall, but renewed exchanges of fire subsequently pushed prices higher.
Glapiński said the conflict could continue for a long time. Its impact on the Polish economy has, however, proved smaller than initially feared. In his assessment, Poland is not currently facing a repeat of the sharp inflation surge recorded in 2022.
NBP Raises Inflation Forecasts for 2026 and 2027
The latest inflation report published by the National Bank of Poland brought a significant upward revision to the inflation forecasts for 2026 and 2027, accompanied by a slight reduction in the expected rate of economic growth.
The new projection therefore assumes somewhat higher inflation and weaker economic conditions over the coming quarters than the central bank anticipated in March.
According to the latest forecasts, average annual inflation is expected to reach 2.9% in 2026, compared with 2.3% in the March projection. The forecast for 2027 was raised from 2.4% to 2.7%, while the estimate for 2028 was reduced slightly from 2.3% to 2.2%.
Inflation is therefore expected to remain within the NBP’s permitted target range of 1.5% to 3.5%. However, price growth in the second half of 2026 could be higher than previously anticipated.
The central projection indicates that inflation could stand at around 3% in the third quarter before rising to 3.2% in the fourth quarter. It is then expected to decline gradually in the following years.
Rapid Series of Rate Cuts Remains Unlikely
Despite Glapiński’s dovish rhetoric, the July projection does not provide a strong argument for launching a rapid series of interest-rate cuts. Higher inflation forecasts for 2026 and 2027, persistently elevated core inflation and the unfavourable condition of public finances all support a cautious approach.
The NBP governor’s comments have nevertheless increased the probability of an earlier, one-off reduction, provided inflation remains under control in the coming months and geopolitical tensions do not lead to a sustained increase in energy prices.
EUR/PLN was quoted at approximately 4.3380 following the remarks, its highest level since November 2024.
