NBP interest rates: Will we return to rate cuts in 2026?

In July 2026, the Monetary Policy Council (MPC) kept interest rates at an unchanged level, continuing the cautious policy initiated back in November 2024. Currently, there are no grounds for rapid cuts due to the unstable geopolitical situation and pressure on the zloty exchange rate. The reference rate remains anchored at 5.75 percent, which for most market analysts is a signal that the central bank prioritizes currency stability over ad-hoc stimulation of economic growth.

The scale of challenges for the MPC in mid-2026

The Council's July decision is not merely a technical extension of the current state of affairs. It is the result of a hard risk calculation, in which energy commodity prices have become the main player. The latest CPI reading of 5.1 percent effectively knocked any plans for monetary policy easing out of the Council members' heads. Core inflation, although showing a tendency to stabilize, is still above the NBP target, which, in an unstable international environment, makes every rate cut a potential mistake with high political and economic costs.

Council members, analyzing the minutes from previous months, point to the high sensitivity of the Polish zloty to external factors. Foreign capital, sensitive to geopolitical risk, reacts with a sharp sell-off of assets in emerging markets at every sign of anxiety. The escalation of tensions around Iran and threats to trade routes in the Middle East translate directly into market valuations. The zloty, as a currency perceived by investors as riskier compared to the dollar or the euro, is under constant pressure. Lowering interest rates in such an atmosphere could lead to capital outflow, which would weaken the zloty and, consequently, raise the costs of importing fuels and raw materials, fueling inflation.

The Council is operating in defensive mode. The priority has become maintaining the attractiveness of Polish financial assets for foreign investors. With interest rates at 5.75 percent, the yield on treasury bonds remains at a level that allows for financing the state's borrowing needs without having to offer extremely high risk premiums. If cuts were to occur, the debt market would react with an immediate increase in yields, which for the state budget would mean higher debt servicing costs in the coming years.

WIBOR 3M as the hard reality for borrowers

WIBOR 3M, which is the main component of the interest rate for most mortgage loans in Poland, is currently 5.92 percent. For a borrower, this means that despite the lack of rate hikes for a long time, the cost of money remains relatively high. Commercial banks show no desire to aggressively reduce margins, as they themselves must manage liquidity risk in an unstable environment.

Let's consider a mortgage loan for the amount of 300,000 PLN with a repayment period of 25 years. With an interest rate based on WIBOR 3M (5.92 percent) and a typical bank margin of 2.0 percent, the total interest rate on the loan is 7.92 percent. The monthly principal and interest installment for such an obligation currently oscillates around 2315 PLN. This is an amount that significantly burdens household budgets, especially in the face of still-felt living costs. Every MPC decision to keep rates unchanged is a direct verdict for Poles' wallets, pushing back the hope for a decrease in monthly burdens.

For many borrowers, this situation is frustrating. They expected that after the period of post-pandemic turmoil, the interest rate path would trend downward, which would allow for refinancing debt on better terms. The market, however, says otherwise. Commercial banks, in their forecasts for the end of 2026, do not assume sharp changes in monetary policy, which means that loan offers remain expensive. Borrowers who took on obligations during the period of historically lowest rates must now face installments several hundred percent higher than their original plans.

Why geopolitics dictates the terms for the domestic MPC

The Polish economy is heavily dependent on supply chains that largely run through flashpoint areas. Tensions around Iran are not just a political problem, but primarily a commodity one. The oil market reacts to every change in rhetoric in the region, which translates into global energy prices. Poland, importing a significant portion of its energy raw materials, is directly exposed to price shocks. The MPC cannot ignore this fact, as rising energy prices translate into rising production costs, and consequently, into the prices of consumer goods.

The transmission mechanism of monetary policy in Poland is currently blocked by uncertainty. On one hand, we have weakening economic growth dynamics, which would suggest support through cheaper money. On the other hand, we have persistent inflation, which could accelerate again with the slightest loosening of monetary conditions. Council members face a dilemma that cannot be solved through simple macroeconomic models. They must weigh risks, taking into account not only industrial production data but also the sentiment on financial markets in London, New York, or Frankfurt.

This situation forces the NBP to be cautious, which is sometimes perceived as inertia. However, in current conditions, a lack of movement is a calculated move. Keeping rates at 5.75 percent is a signal to the market that Poland does not intend to experiment with monetary policy at a time when the global economy is in a phase of high volatility. Investors, looking at Polish rates, see predictability, even if it is costly for domestic debtors.

Impact on the private sector and investments

Companies financing their operations based on variable interest rates are in a difficult position. The high cost of debt limits investment opportunities, especially in sectors requiring high capital expenditures. Enterprises, instead of developing machine parks or innovations, are forced to optimize current costs to meet high interest installments. This hampers economic growth potential in the long term.

This does not mean, however, that the entire economy is in stagnation. Export-oriented sectors, benefiting from a certain weakening of the zloty, are doing relatively well. However, for companies operating mainly on the domestic market, high interest rates are a barrier that cannot be jumped over without improving operational efficiency. As a result, we are observing a process of market consolidation – financially weaker companies are falling out of the market, and those with stronger balance sheets are taking over their shares.

For stock market investors, keeping rates at the current level means that companies in the banking sector will remain beneficiaries of the current situation. High interest margins, resulting from the difference between loan interest rates and deposit costs, allow banks to generate high profits. However, this is a profit burdened by credit risk. If high interest rates lead to a wave of non-performing loans, the banking sector may quickly feel the negative effects of its current profitability.

Perspective for savers

Those with savings are in a situation that is more favorable compared to previous years. Deposits offered by commercial banks, although they do not guarantee "earnings" above inflation, allow for at least partial protection of capital against loss of value. However, with inflation at 5.1 percent, real interest rates remain around zero or slightly negative.

Savers must be more selective in choosing financial instruments. Bank deposits have ceased to be the only option. Individual investors are increasingly directing their capital toward inflation-indexed treasury bonds, which represent a real alternative to traditional banking products. Keeping rates unchanged by the MPC in July 2026 means that this trend will continue. Banks have no pressure to raise deposit interest rates because liquidity in the system is sufficient to cover credit needs.

For those accumulating capital, it is crucial to understand that in 2026, one cannot count on "free" profits. Every investment requires risk analysis, not just looking at the nominal interest rate. The MPC, by keeping rates at 5.75 percent, is effectively communicating that it does not intend to artificially support consumption through cheap money, which is good news for fighting inflation, but less favorable for those looking for safe and high-interest havens for their capital.

Geopolitics as the main risk factor

The escalation of tensions in the Middle East is a factor that cannot be predicted using standard econometric models. Every report from that region is analyzed by MPC members with extreme care. If the conflict in Iran intensifies, the consequences for global fuel markets could be catastrophic. Poland, as an open economy, will feel this immediately through rising energy prices.

The MPC, aware of this risk, is building a reserve in its policy. Keeping rates at 5.75 percent is a form of "safety cushion." If there is a drastic increase in inflation caused by fuel prices, the MPC will have room for maneuver for potential hikes. If rates were lower, the central bank would find itself in a trap from which an exit would be much more difficult and costly for the economy.

This "wait and see" approach is not a sign of helplessness, but an expression of institutional maturity. In times when the world changes from week to week, rigidly sticking to plans from a year ago would be a mistake. The Monetary Policy Council in July 2026 showed that it can adapt to the situation while maintaining stability as the main goal of its activities.

What does this mean for the future of 2026?

In the second half of 2026, the market should not expect breakthroughs. If there is no sharp calming of sentiment on commodity markets and an improvement in the geopolitical situation, interest rates will remain at the current level. Forecasts from financial institutions indicate that even if inflation begins to fall slowly, the MPC will delay the decision to cut until it has complete certainty about the durability of this process.

For borrowers, this means the necessity of continuing to manage their budgets assuming high debt servicing costs. It is worth considering overpaying the loan if the household budget allows it, as in conditions of high rates, this is one of the most effective methods of cost reduction. In turn, companies should focus on improving efficiency and looking for sales markets that are not as sensitive to zloty exchange rate fluctuations.

Stability is currently the most valuable asset that the NBP can provide to the economy. Although it is felt as painful for debtors, it constitutes the foundation on which the Polish economy is trying to survive a period of global uncertainty. In 2026, there is no room for mistakes, and every MPC decision is proof of this.

Questions and answers

Will interest rates fall in 2026?

In July 2026, the MPC kept rates at 5.75 percent. The current geopolitical situation, including tensions around Iran and pressure on the zloty exchange rate, make rapid cuts unlikely. The priority remains price stability and protecting the currency from depreciation.

How does the situation in Iran affect my loan installments?

The conflict in the Middle East affects oil and gas prices, which fuels imported inflation. To counteract this, the NBP must maintain high interest rates, which translates into a high WIBOR 3M rate. This, in turn, directly determines the amount of your variable-rate loan installment.

When will the MPC make its next decision?

MPC decisions are made during monthly meetings. Each of them is preceded by an analysis of the latest macroeconomic data, including inflation readings and an assessment of external risk, which in 2026 remains the main factor influencing the Council's decisions.

Is it worth refinancing a loan now?

In current conditions, there are no signals from the market that would indicate the profitability of refinancing loans on better terms in the near future. Commercial banks include geopolitical risk in their offers, which means that financing costs remain stably high. Before making such a decision, one should carefully calculate the costs of commissions and margins compared to the current obligation.

What is the role of the zloty exchange rate in MPC decisions?

The zloty exchange rate is crucial for fighting inflation. A weakening of the currency raises the prices of imported goods, which, given high price pressure, is unacceptable for the central bank. Keeping rates at a high level is intended to increase the attractiveness of the zloty, which prevents its sharp devaluation during periods of risk aversion in global markets.

Building of the National Bank of Poland in Warsaw.

The conclusions from the July MPC meeting are clear: the Council puts the safety of the financial system above immediate relief for debtors. Keeping the reference rate at 5.75 percent in the face of still-elevated inflation (5.1 percent) and a turbulent geopolitical situation is a decision intended to protect the economy from external shocks. Borrowers must prepare for the fact that "expensive money" is the new normal that will not disappear in a short time. Every household must verify its expenses based on the current, high level of WIBOR, treating it as a permanent element of the financial landscape for the coming quarters.

The Polish economy is on the defensive, which is a rational response to what is happening beyond our borders. The NBP does not operate in a vacuum. It must take into account real threats to currency stability, which can be reinforced at any moment by a global commodity conflict. From the editorial perspective, this situation is a signal for extreme caution in planning long-term investments. Having liquid savings and avoiding excessive debt is currently the best survival strategy in an environment where unpredictable geopolitics has become the main player.

For entrepreneurs, the July MPC communication is a clear message: one should not count on cheap financing in the near future. Companies that base their business model on cheap debt must verify their plans, as loan servicing costs will not fall in a way that would allow for a return to conditions from the low-rate period. Stability, for which we pay with higher installments, is a cost that the Council deemed necessary to bear in order to avoid uncontrolled price increases in stores and a sharp weakening of the zloty.

Stock market charts showing zloty exchange rate fluctuations.

Ultimately, the decision from July 2026 is not only an economic issue but, above all, a political response to global chaos. The Monetary Policy Council, not wanting to risk the country's financial stability, chose the safest variant. For the citizen, this means the necessity of adapting to higher capital costs. In this new reality, flexibility and the ability to manage debt become key competencies that will allow one to get through a period in which interest rates remain at 5.75 percent. As market observers, we do not expect this trend to change in the near future, which should be the starting point for all financial plans for the end of 2026. The Polish economy, despite external pressures, maintains its course, although the price for this stability is clearly felt in every household budget.

Sources

Article prepared by the Wiadomości PRO editorial team with the support of artificial intelligence. Facts come from the sources listed above.