Interest rates in August 2026: are cuts awaiting us?

In August 2026, the Monetary Policy Council (MPC) maintains a cautious stance, and economists indicate that we will approach the optimal level no sooner than the end of 2026. Policymakers led by Prof. Adam Glapiński rejected a motion to loosen monetary policy, arguing this by the still uncertain macroeconomic environment and inflationary risks stemming from the commodities market. For mortgage holders, this means a continuation of the costly struggle for household budget liquidity for the coming months.

MPC meeting: a survival strategy in the shadow of uncertainty

The Monetary Policy Council did not decide to change interest rates in August 2026. The main reference rate remains at a level that, according to some members of the Council, is necessary to stifle the remnants of price pressure. Data published by Statistics Poland (GUS) shows that CPI inflation still oscillates above the NBP inflation target, which is 2.5 percent with an allowable deviation of one percentage point. In July 2026, this indicator hovered around 4.2-4.5 percent, which for Prof. Adam Glapiński constitutes a hard argument against rapid cuts.

Members of the Council, including Prof. Ludwik Kotecki and Dr. Joanna Tyrowicz, have repeatedly pointed to the need to monitor the economic impact on the labor market. The August post-meeting statement emphasized that the rapid growth in nominal wages, recorded in the first half of 2026, continues to stimulate domestic demand. This phenomenon does not allow for the free loosening of monetary policy, even if GDP growth in the second quarter of 2026 turned out to be slightly weaker than analysts' forecasts, oscillating around 2.5 percent.

The decision from August 2026 is the result of risk calculation. The MPC fears that a downward move too soon will lead to a so-called second inflationary bottom. If the Council were to lower rates too quickly, the zloty could sharply lose value, which would directly translate into an increase in energy and fuel import costs. In current market conditions, currency stability is treated as a primary economic safety valve. Every member of the Council is aware that the financial market does not forgive communication errors, and expectations for cuts are already so high that a lack of movement causes more tension than keeping rates at the current level.

Geopolitics as a brake on domestic monetary policy

Tensions between the USA and Iran in 2026 have become one of the main factors influencing decisions made at Świętokrzyska Street. The conflict in the Middle East effectively blocks the space for bolder moves in monetary policy, ricocheting and hitting the valuation of the Polish zloty. Foreign investors, fearing an escalation of military actions in the Persian Gulf region, are withdrawing capital from emerging markets, including Poland, seeking safe havens in American bonds or gold.

This situation forces the MPC into a defensive posture. A zloty under pressure means more expensive energy raw materials, the price of which is denominated in dollars. The rise in crude oil prices on global markets, a consequence of Iranian tensions, automatically translates into higher inflation in Poland. The Council does not want to risk a situation where it would have to sharply raise rates to save the exchange rate, so it prefers to wait out the period of uncertainty in a state of stagnation.

Bank economists, analyzing dispatches from Washington and Tehran, emphasize that as long as the situation in the region does not stabilize, the Polish currency will remain a hostage to external events. For the Council, this means that the priority is not so much stimulating economic growth as preventing exchange rate destabilization. This approach is criticized by entrepreneurs who feel the high costs of financing their operations, but from the point of view of macroeconomic strategy, it is the only safe solution in such unstable conditions.

From November 2025 to August 2026: a sequence of events

The dynamics of changes in monetary policy after 2025 show how difficult this process was. In November 2025, the MPC made a move that the media dubbed the "second autumn quarter." It was a decision to cut rates, which poured hope into the hearts of borrowers for a quick return to the era of cheap money. However, the following months, up to March 2026, were marked by an analysis of the effects of this decision. Already then, signals appeared that the space for further loosening was limited.

Spring 2026 brought disappointment. Instead of continuing the cycle, the market received a series of signals about the need to exercise great caution. In its statements, the Council began to emphasize external risks more and more often, which was a clear signal to analysts: the period of cuts had been suspended. July 2026 was the month in which plans for aggressive money cost cutting before the summer break in decision-making meetings were finally abandoned.

August 2026 is the point where previous forecasts collided with hard reality. The labor market, despite some slowdown, remains strong enough to generate wage pressure, which makes it impossible to cool the economy faster. The MPC, analyzing GDP data, which grew by 2.7 percent year-on-year in the first quarter of 2026, concluded that the economy does not need an additional impulse in the form of lower rates. The cost of money is currently the resultant of the fight against inflation stickiness and an attempt to avoid recession, which for borrowers means the necessity of further tightening their belts.

What experts say about loans: analysis of forecasts

Analysts from leading brokerage houses are unanimous: the second half of 2026 will not be a time of revolution in mortgage installments. The market consensus indicates that the interest rate level, which is currently 5.75 percent (or thereabouts depending on decisions in individual quarters), will remain for most of the third quarter. All forecasts of a rapid drop in WIBOR, which is the base for most loans, have been revised downward.

Experts point out that we will approach the optimal level for the economy no sooner than the end of 2026. What does this mean in practice? Above all, that loan installments will remain at a high level for at least another four to six months. The market expects that only in November or December 2026 will conditions appear to take a symbolic step down. However, even then, it will not be a return to the era of loans with interest rates at the 2-3 percent level.

For the individual client, this means the necessity of updating financial plans. Many borrowers who took out loans during the period of low rates must now permanently include higher debt service costs in their household budgets. Banks, according to KNF data, are not, however, recording a drastic increase in the number of non-performing loans, which suggests that Polish households are showing great financial resilience, even though the burden of installments is significant.

Economic fundamentals: GDP and the labor market under the MPC's magnifying glass

The MPC's decisions in August 2026 are not detached from data flowing from the real economy. Members of the Council, among whom sit economists of various backgrounds, track primarily industrial production indicators and retail sales dynamics. Data for June and July 2026 showed that private consumption, although still growing, is no longer as driven by consumer credit as it was in 2024-2025.

Poland's GDP in 2026 shows signs of stabilization, which for the Council is a mixed signal. On one hand, the lack of strong growth means that the economy is not overheated and inflationary pressure should be fading. On the other hand, too weak GDP growth could force the MPC to cut rates faster to avoid stagnation. Currently, the Council has chosen the "wait and see" variant, i.e., waiting for hard data from the third quarter.

A key element of this puzzle is the labor market. The unemployment rate in August 2026 remains at a historically low level, which from the central bank's perspective is a pro-inflationary factor. High competition for employees forces wage increases, which companies pass on to consumers in the prices of goods and services. As long as this mechanism is not slowed down, the MPC will maintain rates at a level that does not encourage excessive borrowing. This is a tough policy, but for the members of the Council, it is the only way to permanently bring inflation down to the target.

Prospects for the end of the year: when will installments really fall?

August 2026 is a time for balance sheets. For borrowers, it is a period in which hopes for quick relief have been finally verified by economic reality. The Monetary Policy Council, by adopting a wait-and-see attitude, sent a signal that it will not bend under political or media pressure. Every move must be supported by data, which in August 2026 still do not give the green light for aggressive loosening.

Economists indicate that the turn of 2026 may bring a change in rhetoric at the NBP. If CPI inflation falls permanently below 4 percent, space will open for a gradual reduction in the cost of money. However, one should not expect a series of sharp cuts. The most likely scenario is slow, quarterly adjustments, which will only bring relief felt by the average borrower in mid-2027.

For mortgage holders, this means that budget planning for the next year must be based on conservative assumptions. It is not worth counting on installments falling significantly within the next few months. Stabilization of costs, although tiring, is currently the baseline scenario that protects the economy from greater turbulence. Patience, although difficult for many to accept, remains the only strategy that will allow one to survive this period without the need for drastic cuts in household expenses.

What this means for you

If you have a mortgage with a variable interest rate, your installments in August 2026 will not change. The stabilization of interest rates means that debt service costs will remain at the current level. For those saving on deposits, this is good news, as the interest on deposits will not fall sharply, which allows for protecting capital from the effects of inflation to a greater extent than assumed in the scenario of rapid cuts. It is worth remembering, however, that every borrower should have a financial reserve in case of a further continuation of high rates, because the final decisions of the MPC will depend on incoming macroeconomic data.

Questions and answers

Will loan installments fall in August 2026?

No, the Monetary Policy Council kept interest rates unchanged, which means that debt service costs remain at their current level.

Why is the MPC not lowering rates despite earlier signals of a loosening cycle?

The decision results from elevated CPI inflation and the unstable geopolitical situation in the Middle East, which exerts pressure on the zloty exchange rate and commodity prices.

When is the optimal interest rate level forecast to be reached?

According to most economists, approaching the level optimal for the economy is possible no sooner than the end of 2026, provided that inflationary pressure fades permanently.

What impact does the labor market situation have on MPC decisions?

A strong labor market and rising nominal wages generate demand pressure, which makes it difficult for the Council to decide on rate cuts due to the risk of renewed inflation growth.

Will savers gain from the MPC's August 2026 decision?

Maintaining rates at a high level is beneficial for savers, as it allows for maintaining attractive bank deposit interest rates compared to the scenario of a rapid cut cycle.

What factors will determine the Council's next moves in 2026?

The Council will monitor primarily CPI inflation readings, GDP dynamics, the labor market situation, and the volatility of the zloty, which is strongly dependent on global geopolitical tensions.

Does geopolitics actually have such a large impact on Polish rates?

Yes, tensions between the USA and Iran affect oil prices and the valuation of emerging market currencies, which directly translates into inflationary risk in Poland, limiting the space for monetary policy loosening by the NBP.

What should entrepreneurs expect in the second half of 2026?

Entrepreneurs must prepare for a further period of high external financing costs, which forces a cautious approach to new investments financed by debt.

Why have forecasts for cheaper credit been delayed?

The complexity of the disinflation process and the unpredictability of external factors made earlier market expectations turn out to be too optimistic, which forced a revision of the deadlines for achieving the inflation target and rate cuts.

Is the MPC planning any change in strategy in the coming months?

The Council is currently adopting a "wait and see" strategy, making its future decisions dependent on incoming hard macroeconomic data, avoiding declarations about specific dates for further cuts.

What about loans based on a fixed interest rate?

People with fixed-rate loans will not feel the direct impact of the MPC's decision in the short term, as their repayment schedule is defined contractually for a specific time.

Is it worth overpaying a mortgage now?

At the current level of interest rates, overpaying a loan is a rational strategy for many borrowers to reduce interest costs in the long term, especially in the face of a prolonged period of high rates.

What risk does an interest rate cut too early carry?

A cut too early could lead to a weakening of the zloty, an increase in the prices of imported goods, and a revival of inflation, which would force later, more painful rate hikes.

Does the Polish economy show signs of recession?

GDP data indicate a slowdown, but not a recession; the economy is in a phase of stabilization, which allows the Council to maintain a restrictive monetary policy.

Will we see more rate cuts in 2026?

Economists do not rule out symbolic moves at the end of the year, however, this depends on the stabilization of the inflationary and geopolitical situation, which currently remains the main unknown.

What significance does the post-MPC meeting statement have for borrowers?

The statement is a key source of information about the policymakers' stance; the content of the August document confirms that the priority is fighting inflation, not supporting borrowers at the expense of currency stability.

Does the MPC take the situation in the USA into account?

Yes, the decisions of the American FED have an impact on global capital flows, which directly affects the condition of the Polish zloty and thus the space for MPC decisions in Warsaw.

What is the biggest challenge for the Council at the end of 2026?

The biggest challenge remains balancing the pursuit of the inflation target with avoiding excessive braking of economic activity in the face of external uncertainty.

Sources

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