After an aggressive interest-rate cutting cycle by Poland’s Monetary Policy Council (Rada Polityki Pieniężnej, MPC) in 2025, January brought a decision to keep rates unchanged. What were the reasons behind this move? When could the next cuts come? And is there a risk of inflation rebounding? These questions are addressed in a commentary by Michał Stajniak, Deputy Head of the Analysis Department at XTB.
In line with market consensus, the Monetary Policy Council decided to leave interest rates unchanged. This follows a very strong easing phase in 2025, during which Poland’s central bank cut the main policy rate by a total of 175 basis points, bringing it down to 4.00%.
Inflation below target, but seasonal risks remain
The immediate backdrop to today’s decision is December inflation data, which—according to preliminary estimates—slowed to 2.4%. This places price growth slightly below the National Bank of Poland’s (Narodowy Bank Polski, NBP) inflation target of 2.5%. While this outcome marks a success for monetary policy, the MPC remains cautious. Final data due tomorrow will be important to confirm whether inflation is indeed below target and to shed light on the durability of the disinflation process.
The Council had signaled that a pause was likely, citing the need for a thorough assessment of how last year’s rate cuts are affecting the real economy. The start of the year is traditionally associated with the so-called “January effect”—updates to company price lists and changes in administered prices—which typically produce a seasonal uptick in the CPI.
Even so, the fundamentals for a continued decline in inflation remain solid. Persistently low global prices for fuel and natural gas exert deflationary pressure. A clear cooling of labor-market tensions limits demand and wage pressures. The strong performance of the Polish zloty supports the fight against inflation and creates room for potential policy easing in the coming quarters.
March as the first realistic window for a cut
NBP President Adam Glapiński has emphasized that the current rate level (4%) is optimal for maintaining macroeconomic stability. In the base-case scenario, markets expect one or two further cuts in 2026, effectively bringing the cycle to a close. If, however, inflation continues to fall faster than expected, a scenario in which rates decline even to 3% becomes realistic—still leaving real interest rates positive if inflation remains near target.
As a result, investors’ attention is now focused on the March inflation report. The central bank’s new projection is expected to be the decisive argument for resuming the easing cycle, making March the most likely timing for the Council’s next move.
The zloty remains very strong, though today’s changes are modest. The euro is trading slightly above PLN 4.21, while the US dollar is just over PLN 3.61.
