Rates will fall like leaves. How low will NBP rates go?

November interest rate cut at the National Bank In Poland, it's most likely already decided. Now the question is how sharp what cuts will the Monetary Policy Council impose on us and how low will the interest rate fall? zloty in 2026.

Within half a year the Monetary Policy Council has already made four interest rate cuts, reducing the NBP reference rate by 125% in total basis points. It started in May, when the Council resumed the cycle of cuts (although it itself she called it "adjustment" then), cutting the interest rate on the Polish zloty immediately by 50 basis points (i.e. half a point interest rate) . It was the first NBP interest rate cut after more than a year and a half period of keeping the reference rate unchanged level .

After that, things went quickly. In June, the Council "rested" and kept rates unchanged . But in July, the Monetary Policy Council surprised most economists by unexpectedly reducing borrowing costs by 25 pb. In August, as usual, there was no "decisive" meeting of the Council, and In September, in line with market expectations, NBP rates were lowered by another 25 basis points . The Monetary Policy Council followed suit in October, contrary to consensus, cutting again by 25 bps.

This time, economists are convinced that at the November meeting meeting, the Monetary Policy Council will cut interest rates again by 25 basis points . This way, the NBP reference rate would be cut from 4.50% to 4.25%. forecasts confirmed the preliminary October CPI inflation data, which fell from 2.9% to 2.8% . more, the monthly CPI growth was only 0.1%, although economists assumed increase by 0.4% month-on-month

- Inflation data for October in our opinion increase the probability of an interest rate cut at the MPC meeting in November. With a high volatility of rhetoric, the Council has recently shown sensitivity to Current inflation readings – this is how economists commented on the October CPI reading PKO BP.

- The CPI reading for October at 2.8 percent year-on-year is strongly surprised us down and convinced us to revise our expectations regarding the decision MPC - we believe that another rate cut has become slightly more likely than a pause – Santander economists echoed them. Even before the CPI data MPC member Przemysław Litwiniuk did not rule out that in November, there may be there is room for another 25 bp interest rate cut.

After a quite probable rate cut in November, the Council will probably refrain from further easing of monetary policy at the meeting December. It has become a tradition that the Monetary Policy Council usually does not change rates on the last meeting of the year. In this context, what is really important is what decisions will be due in the first half of 2026 and where the "floor" for feet is located NBP.

- I have no support from the Council here, nor any basis for this, the Council does not allow me to do this. It didn't authorize it, but I think we can move towards 4% if it holds up. inflation this way - this way during the October press conference NBP President Adam spoke Glapiński. Also a large part of banking economists as a lower bound for The central bank sees interest rates at 3.50-4.00%. And that's just 50-100 bps from what we may see after the November Council decision.

- We have a rather dovish attitude towards future rates interest rates and inflation in Poland. We were one of the few institutions forecasters who expected a rate cut in October (-25 bps. - PAP). In our opinion, over time there will probably be a need to lower them. to the target level of 3.5 percent, and this is the forecast that we have been maintaining since for a long time – they believe Goldman Sachs economists . This is the same level of interest rates as they have been since May. is held at the Czech National Bank. However, the Czechs have an inflation target is 2%, and in Poland 2.5% (with a permissible deviation of one point percentage up and down).

During the November meeting, the Council members will be have a new inflation projection of the National Bank of Poland. It is in it is basically certain that this November projection will be quite significantly was different from the one presented in July . The latter assumed that CPI inflation will reach the 2.5 percent target only in the second quarter of 2027, assuming that NBP rates will remain unchanged.

But almost all members of the Council probably not so much. they took these conclusions seriously, because both in July and September and in In October, they voted in favor of interest rate cuts. And theoretically they should not, because according to the NBP projections the inflation target will not be met realized neither this year nor next. Or so most policymakers actually moved the inflation target from 2.5% to 3.5% (i.e. being satisfied with keeping CPI inflation within the upper limit of acceptable deviations), or the Council does not fully trust NBP analysts. Or the premises behind the July projection were deemed to be highly outdated.

The November NBP inflation projection itself is most likely We will find out on Friday at the earliest. But its most important conclusions (i.e. forecasted central path for CPI and GDP) should be included already in Wednesday's Council announcement, scheduled for publication at 4:00 p.m. Traditionally, we only know the day, but not the hour, of publication of the Policy Council's decision. Money. The October decision was communicated to us at approximately 3:15 p.m.

However, what should be more important than the message itself is Thursday's press conference of the head of the Monetary Policy Council and also the chairman of the Council took place Adam Glapiński. It will usually begin at 3:00 PM.

The last MPC meeting in 2025 is scheduled for 2-3 December. In the past, December MPC meetings rarely brought any however, changes in interest rates.

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