Interest rates in August 2026: will borrowers get a breather?

The Monetary Policy Council kept interest rates unchanged in July 2026, which means no further reductions in loan installments in August, despite the earlier easing cycles that began in 2025. This decision freezes the NBP reference rate at 5.25 percent, which for many borrowers signals the end of hopes for a rapid decrease in monthly financial obligations. Instead of the expected breather, the market must face a "wait and see" policy, which, in the face of tensions in the Middle East, has become the dominant paradigm for the central bank's actions.

The stabilization of the cost of money is not the result of a lack of tools, but the result of a cold risk calculation. A borrower taking out a loan of 500,000 zlotys for 25 years, with current interest rates oscillating in the range of 7.5-8 percent (including the bank's margin and WIBOR), must prepare for a principal-interest installment of around 3700–3900 zlotys. The lack of movement from the MPC means that this amount will not budge in August. On an annual basis, this means an expense for the household that is several thousand zlotys higher than in the optimistic scenarios assumed at the beginning of the year.

The mechanism of holding the decision: why are rates standing still?

The Monetary Policy Council, in deciding to keep rates unchanged in July, sent a signal prioritizing the stability of the zloty over the dynamics of economic growth. Every percentage point of a rate cut, under normal conditions, is a stimulus for investment and consumption. However, in July 2026, the macroeconomic situation was dominated by external variables. The escalation of the conflict between the USA and Iran introduced a level of uncertainty to financial markets that effectively paralyzes decisions on monetary policy easing.

Foreign investors withdraw capital from emerging markets when geopolitical risk increases. The Polish currency, perceived by global funds as a high-risk asset, is under pressure. Lowering interest rates in such an environment could lead to a sharp depreciation of the zloty. A weak currency means more expensive imports, which consequently means imported inflation. The MPC is therefore faced with a choice: provide relief to borrowers at the cost of weakening the zloty and rising prices in stores, or maintain rates, protecting the purchasing power of money but freezing high loan installments. The choice fell on the latter option.

Analyzing the communications from the Council's meetings, one can see a clear change in narrative compared to the end of 2025. At that time, after the second autumn quarter of cuts, sentiment was enthusiastic. Today, caution dominates. Members of the Council emphasize that domestic inflation data is not the only determinant. Exchange rate stability also counts, which in current conditions requires high interest rates as a "shield" against speculative attacks on the zloty.

Geopolitics and the Polish zloty: why does the currency exchange rate paralyze decisions?

The zloty is currently a hostage to events in the Middle East. The US-Iran conflict has triggered a wave of risk aversion, which automatically translates into a weakening of emerging market currencies. Poland, as a frontline country and one strongly linked to the European supply chain, feels these tremors particularly strongly. The MPC, monitoring the situation, concluded that further rate cuts could be perceived by the market as waving a white flag in the fight for monetary stability.

Analysts from "Parkiet" point out that the pressure on the exchange rate has become an insurmountable barrier for the central bank. Every rate cut reduces the attractiveness of deposits and bonds denominated in zlotys. If the difference in yield between Polish assets and safe assets (e.g., US bonds) becomes too small, capital will flow out, weakening the zloty. This is a vicious circle from which the MPC cannot escape without exposing the economy to the inflationary effects of a weak currency.

This situation is not just a problem for the central bank, but a real burden on the wallet of every borrower. Hopes for rapid cuts, which were fueled in the autumn of 2025, have collided with hard reality. August 2026 brings no breakthrough because volatility in commodity and fuel markets, fueled by tensions in Iran, directly translates into inflation expectations. The MPC cannot afford a mistake that could lead to another spike in energy prices, which would negate any benefits from cheaper credit.

The road to the optimal level: forecasts for the end of 2026

Economists' forecasts, cited in "Forbes" analyses, indicate that reaching the optimal level of interest rates is possible at the earliest by the end of 2026. However, this is a conditional scenario. It assumes the extinguishing of geopolitical tensions and the stabilization of price growth dynamics in Poland. The current stagnation is not the result of a lack of political will, but a technical necessity to stabilize the system.

The process of monetary policy easing, which began in November 2025, has not been canceled, but merely paused. This is a key distinction. The Council did not reverse the trend, but changed its pace. For borrowers, this means that the long-term trajectory of the cost of credit remains downward, but the curve of this decline has become almost flat. Instead of a series of rapid decisions, we are observing a process of "fine-tuning" the economy to external conditions.

Reaching the optimal level in question depends on several factors. The first is the situation in the labor market. If wage pressure remains high, the MPC will be forced to keep rates at a restrictive level to cool consumption. The second factor is the budget deficit. State spending acts in a pro-inflationary manner, which forces the central bank to counter. As a result, August 2026 is a time when decisions about the future of rates are postponed to subsequent quarters, and borrowers are left to observe macroeconomic indicators that previously seemed distant from their daily affairs.

Borrowers vs. savers: a balance of gains and losses

The relationship between borrowers and savers is a classic zero-sum game in monetary policy. Keeping interest rates at 5.25 percent in July 2026 protects the savings of Poles from a further real decline in value, but at the same time constitutes a burden for debtors. An INFOR.PL analysis from March 2026 accurately predicted that this dilemma would be the axis of disputes within the Monetary Policy Council.

Savers, who in the face of inflation are looking for safe havens, are receiving a signal that deposit interest rates will remain at current, moderate levels. For them, the stabilization of rates is beneficial, as it prevents a further decline in the real interest rate on savings. Borrowers, on the other hand, pay the price for this security. Their installments remain high, inadequate to their original budget plans.

This clash of interests is best seen in household debt statistics. Many people, based on forecasts from the beginning of 2026, assumed that by the summer their monthly obligations would fall by a dozen or so percent. The July MPC decision brutally verified these expectations. Illusions about systematic cuts have been shelved, and household budgets must function in a regime of high debt service costs. In this stalemate, August 2026 passes under the sign of accepting the current state of affairs, as neither side – neither borrowers nor savers – receives a signal to change their financial strategy.

History of decisions: from November 2024 to August 2026

A historical analysis of the last two years shows that MPC decisions have rarely been predictable. In November 2024, the reference rate was 5.75 percent, which was the starting point for later discussions about easing. A year later, in November 2025, the market saw the second autumn cut, which gave an impulse for optimism. However, July 2026 brought a pause. This sine wave of decisions reflects the volatility of the external environment, to which the Polish central bank reacts with a delay.

The chart of interest rate changes over the last 24 months resembles a road map that was interrupted at some point by unforeseen geopolitical events. As late as April 2026, the market was pricing in further cuts. Today, those estimates are outdated. Keeping rates unchanged is confirmation that the central bank has adopted a defensive strategy. For borrowers, this is a period of suspension, in which they must operate on their existing resources, without hope for a quick cash injection through a reduction in installments.

People who took out loans at the peak of the 2024 cycle feel the weight of unfulfilled market promises today. Every month without a rate cut is a net loss for them, resulting from higher interest costs. Savers, on the other hand, although satisfied with the maintenance of deposit interest rates, see that inflation is still consuming part of their profits. This is a system in which no one wins completely, and everyone has to pay the price for global instability.

What's next? Factors influencing decisions in September and October

The future of interest rates in the second half of 2026 depends on two unknowns: GDP data and hard inflation readings. If the economy slows down faster than expected, the MPC may be forced to return to the path of cuts, regardless of geopolitics. However, if inflation remains above the target, the pause may be extended.

September and October will be crucial for assessing whether the July decision was just a momentary stop or the beginning of a long-term period of high rates. An economist quoted by "Forbes" noted that the process of reaching the inflation target is a process with high inertia. This means that we will only feel the effects of the decisions made in July in a few months. Financial markets will carefully follow every comment from Council members, looking for clues regarding their stance on the government's fiscal policy.

Budget expenditures planned for the end of the year may become another flashpoint. If the government decides on fiscal stimulus, the MPC will have to "tighten the screw" in monetary policy. This is a scenario that every borrower fears: the government gives, and the central bank takes away in higher interest. Hopes for relieving household budgets thus collide with macroeconomic dilemmas over which the average citizen has no control. All that remains is to follow the announcements after subsequent Council meetings and adjust personal finances to realities that – as it turns out – can be exceptionally durable.

What this means for you

The MPC's decision to keep interest rates at 5.25 percent in July 2026 means no changes to the repayment schedule for August for borrowers. Your installment remains at the same level as in previous months, regardless of market expectations. For savers, it is a signal that the interest rate on deposits will not change significantly, which, given current prices of goods and services, requires careful capital management to avoid its real depreciation.

Questions and answers

Will loan installments fall in August 2026?

No. Keeping interest rates at 5.25 percent in July means that the amount of installments for variable-rate loans remains at the current level in August.

When can we expect further rate cuts?

Experts indicate that reaching the so-called optimal level of interest rates, enabling further easing, is realistic at the earliest by the end of 2026, provided that the geopolitical and inflationary situation improves.

Why does the situation in Iran affect my loan in Poland?

Geopolitical tensions cause uncertainty in currency markets, which weakens the zloty. A weak currency increases the risk of imported inflation, which forces the MPC to keep higher interest rates to protect the value of money, which in turn keeps credit costs at a high level.

What role does inflation play in MPC decisions?

Inflation remains the main point of reference for the Council. As long as data on price dynamics do not indicate a permanent slowdown in wage and demand pressure, the MPC will remain cautious about cutting rates, even if the economic situation weakens.

Sources

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