Today, the Monetary Policy Council has decided to keep the interest rates unchanged, in line with the market consensus and our forecast, with the NBP reference rate standing at 4.00%. The press release indicated that the annual GDP growth in Q4 2025 was probably similar to the Q3 readings. Core inflation in November and December also came in at similar levels. According to the press release, “against this background, the Council decided to keep the NBP interest rates unchanged.” Other modifications to the press release compared with December included the Council listing the main risk factors for inflation outlook (“fiscal policy, expected recovery of demand in the economy, further developments in wage growth as well as macroeconomic situation abroad, including changes in global commodity prices and inflation”), but replacing “energy prices” with the “macroeconomic situation abroad, including changes in global commodity prices and inflation” as risk factor. The Council also repeated its assessment regarding the future level of interest rates, which “will depend on incoming information regarding prospects for inflation and economic activity”. In our view, the tone of the press release after the January meeting is ambiguous again, and the MPC’s approach to the monetary policy still lacks clarity.
Monetary policy easing cycle is not over yet
The press release after the MPC meeting indicates that the Council’s decision to keep the interest rates unchanged was driven primarily by stability of economic growth and core inflation. In our view, the room for interest rate cuts in the coming quarters is still limited - our conclusion is underpinned by our mid-term inflation forecast, where we expect the price growth rate to rise above 3% YoY in Q4 2026, boosted by low base effects on food and fuels prices. In our view, the target NBP reference rate consistent with maintaining macroeconomic balance is 3.75%. Consequently, we expect another 25bp rate cut, the last one in the current cycle, to take place in March 2026, coinciding with the release of the new inflation projection, which in turn will allow us to assess the outlook for medium-term price growth more precisely. We believe that the likelihood of interest rate cuts in February is low given the inflation data calendar (no new data will be released prior to the February MPC meeting). Tomorrow’s press conference by A. Glapiński will probably offer more clarity about the monetary policy outlook. We anticipate that the NBP Governor will be lowering the expectations concerning further interest rate cuts.
In our view, today’s decision of the MPC to keep the interest rates unchanged and the text of the press release after the meeting are neutral for the PLN and the yields on Polish bonds.
