mBank economists have updated their short-term forecasts for the Polish economy, interest rates and the foreign exchange market. Their latest projections suggest that the coming months should bring relative stability in both inflation and monetary policy. The most important conclusion for borrowers, however, is that they may have to wait much longer for another interest-rate cut than advocates of faster monetary easing would hope.
mBank economists believe that Poland’s Monetary Policy Council, or RPP, remains relatively dovish, but current economic conditions do not justify a rapid return to rate cuts.
“The RPP will remain in wait-and-see mode. Although the Council is clearly dovish, neither economic conditions nor inflation provide grounds for rapid interest-rate cuts,” the bank’s economists said.
In their view, the situation may only change next year, when economic growth is expected to slow and inflationary pressures should become weaker.
Under mBank’s baseline scenario, the next move by the RPP will be a 25-basis-point rate cut in July 2027.
That would imply a prolonged period of stability in the cost of money in Poland.
Poland’s Economy Seen Growing 3.7%
The lack of urgency on the part of the RPP partly reflects the relatively strong condition of the Polish economy.
mBank economists expect Poland’s GDP to grow by 3.7% in 2026.
Investment is expected to play an increasingly important role in supporting economic activity, particularly as projects financed through Poland’s National Recovery Plan gain momentum.
This would mean that, after a period in which household consumption remained one of the main drivers of economic growth, investment could begin to make a larger contribution.
That is positive for the broader economy, but at the same time it gives the RPP another reason not to rush into further monetary easing.
Inflation Near 3%, but Could Rise Toward 3.5%
Inflation is the second key factor arguing against rapid rate cuts.
According to mBank’s forecasts, Poland’s consumer price index should remain close to 3% in the coming months.
Toward the end of the year and in early 2027, however, inflation could temporarily rise toward approximately 3.5%.
Economists expect food prices to be the main driver of that increase.
At the same time, mBank considers the probability of inflation moving above 3.5% to be relatively low.
Such a scenario would suggest that inflation is unlikely to get out of control, but it may still remain too high to give the RPP a strong reason to begin another phase of rate cuts quickly.
The Zloty Is Close to Fair Value
mBank economists also commented on the foreign exchange market.
In their view, the EUR/PLN exchange rate is currently close to a level justified by the fundamentals of the Polish economy.
This means the bank is not expecting either a sharp depreciation of the zloty or a significant strengthening driven purely by the current macroeconomic environment.
That does not mean risks are absent.
One of the most important factors will be Poland’s fiscal policy.
Economists point to increasing discussion about the possibility of further fiscal easing. Under normal circumstances, higher public spending can support economic activity, improve growth prospects and, as a result, support the domestic currency.
This time, however, the market reaction could be more complicated.
Poland already has a high general government deficit, while public debt remains on an upward trajectory. Investors may therefore look at additional spending not only through the lens of stronger GDP growth, but also in terms of the risk of further deterioration in the country’s fiscal position.
Fiscal policy could therefore become one of the most important factors affecting the zloty in the coming months.
No Fed Hike: mBank Goes Against Market Expectations
mBank’s forecasts for the United States are even more striking.
The bank disagrees with part of the market consensus that assumes the Federal Reserve could resume raising interest rates.
“Contrary to market consensus, we do not expect the Fed to raise interest rates this year. We go even further and believe that its next move will be a rate cut in 2027,” mBank economists said.
If that scenario proves correct, it would mean that current market expectations for US monetary policy are too hawkish.
Such a development would have implications not only for US bonds and equity markets, but also for the dollar and emerging-market currencies, including the Polish zloty.
ECB Expected to Raise Rates Once More
mBank sees a different situation in the euro area.
The bank expects the European Central Bank to raise interest rates at its next meeting.
Economists believe, however, that this will be the final increase in the current short tightening cycle.
The ECB’s subsequent move is expected to be in the opposite direction.
mBank forecasts that interest-rate cuts in the euro area will begin in 2027.
2027 Could Be the Key Year for Poland
mBank’s latest forecasts present a relatively consistent picture of the coming quarters.
The Polish economy is expected to continue growing at a solid pace in 2026, supported increasingly by investment linked to the National Recovery Plan. Inflation should remain close to the National Bank of Poland’s target, although it could temporarily move toward 3.5% around the turn of the year.
Under such conditions, the Monetary Policy Council is unlikely to have a strong incentive to make rapid changes to interest rates.
According to mBank economists, only weaker economic growth and lower inflation in 2027 are likely to create sufficient room for another rate cut.
For borrowers, this means that the wait for clearly cheaper financing may continue for almost another year.
For investors, the zloty will be equally important. mBank economists consider the current EUR/PLN exchange rate to be close to equilibrium, but fiscal policy is likely to play a growing role in the currency’s outlook.
The key question will be whether further increases in public spending begin to raise concerns about the scale of Poland’s budget deficit and the trajectory of public debt.
Source: Forecasts by mBank economists, prepared by the team led by Dr Marcin Mazurek, Chief Economist at mBank.
