Will interest rates fall in 2026? Here is what awaits borrowers

Interest rates will not fall before the end of 2026. As of July 2026, they remain unchanged at 5.75%, under pressure from geopolitical factors, and economists predict that an optimal interest rate level will be reached no sooner than the end of 2026. Following the rate-cutting cycle that began in November 2025, the current RPP policy is focused on extreme caution in light of the unstable international situation. For millions of Poles repaying mortgage loans, this means that hopes for a sharp reduction in debt servicing costs must be reconciled with hard macroeconomic data.

In July 2026, the Monetary Policy Council decided to keep interest rates at 5.75%. This move is a direct response to the escalation of tensions between the USA and Iran, which is destabilizing global financial markets and affecting asset valuations in the Central and Eastern European region. The Polish currency, as a high-risk asset, reacts to these shocks almost immediately. Any weakening of the zloty against the US dollar or the euro generates the risk of imported inflation, which, in the eyes of policymakers at the National Bank of Poland (NBP), rules out aggressive monetary easing. The RPP cannot afford a mistake that would permanently undermine the stability of the zloty in such a turbulent environment.

The rate-cutting cycle, initiated in November 2025, was a clear signal to the market of a shift in monetary policy. That move, described by analysts as the "second autumn quarter," raised expectations for a quick return to cheap money. The market assumed that a series of cuts would become a permanent feature of the economic landscape for subsequent quarters. However, reality has brutally verified these forecasts. Instead of a smooth transition to low rates, borrowers were met with a wait-and-see strategy. The Monetary Policy Council, operating under conditions of high uncertainty, chose a defensive stance.

The RPP's position in the face of a changing macroeconomic environment

The policymakers sitting at the RPP table in July 2026 are not guided by the emotions of borrowers, but by cold risk calculation. The main factor hindering further cuts is the condition of the zloty in the face of armed conflicts in the Middle East. As long as tensions between the USA and Iran do not subside, the Polish central bank will remain in a state of heightened vigilance. Currency stability is currently more important than the nominal level of loan installments.

Managing monetary policy in such conditions is like walking a tightrope. On one hand, there are social and political expectations; on the other, the hard requirements of fighting inflation, which in 2026 is not fading as quickly as assumed in optimistic models. Members of the Monetary Policy Council realize that lowering rates too early could lead to an exodus of foreign capital from Polish bonds. This, in turn, would force an even higher risk premium, which would ultimately raise market financing costs for the entire state.

The RPP's modern approach to the cost of money is based on flow analysis. At a time when risk aversion is rising in global markets, capital flows to so-called safe havens, such as the US dollar or the Swiss franc. Poland, being in the immediate vicinity of regions affected by tensions, feels this outflow most strongly. The result is pressure on the zloty to weaken. Therefore, the RPP cannot afford to loosen policy when the currency is losing value. This is a mechanism that can only be exited by calming the external situation.

November 2025: The beginning of the rate-cutting cycle

The autumn of 2025 was a time of great hope. The start of the rate-cutting cycle in November of that year was perceived as the definitive end of the period of restrictive rates. At that time, the financial market was pricing in a quick return to cheap money. However, even then, the RPP's decision was burdened with a number of caveats. It was emphasized that every subsequent meeting of the Council would be a test of the domestic economy's resilience to external shocks.

That moment was a turning point, where borrowers began to calculate their budgets based on lower rates. Many people took out loans, counting on the downward trend to continue throughout 2026. Today, from the perspective of July 2026, it is clear that those calculations were burdened with risks that could not have been fully estimated at the time. Geopolitics, which seemed like a secondary factor in November 2025, has become the main director of monetary policy in Poland.

There is a clear dynamic between commercial banks and clients. Banks quickly incorporated the first cuts from late 2025 into their loan offers, but held back on further interest rate reductions in mid-2026. This is because market interest rates, such as WIBOR, anticipate RPP decisions. Since the market has stopped believing in rapid declines, loan interest rates have stopped falling, even though the official NBP reference rate remains at 5.75%, which theoretically should favor lower debt costs.

The impact of geopolitical tensions on the Polish economy

July 2026 is a time of confrontation with hard reality. The Polish central bank is, in fact, a hostage to events in the Middle East. The US-Iran conflict is not just a political problem; it is a real economic factor that directly affects energy commodity prices. Higher oil prices mean higher inflationary pressure, which translates directly into the RPP's decisions to keep rates unchanged.

The Polish economy shows high sensitivity to macroeconomic variables. The stability of the zloty is the foundation upon which inflation control rests. If the zloty weakens, import costs rise, which automatically drives up the CPI index. The RPP, having a statutory duty to ensure price stability, cannot ignore this mechanism. Maintaining interest rates at 5.75% is therefore a form of shield intended to protect the purchasing power of money from the effects of external turbulence.

Understanding this mechanism is crucial for every borrower. Many indebted people ask themselves why inflation is falling while interest rates are not following suit. The answer lies in currency risk. If the central bank were to lower rates too quickly, the difference between rates in Poland and rates in the USA or the eurozone would become too small. Foreign capital would withdraw from Poland, weakening the zloty and fueling inflation. This is the price we must pay for the openness of the Polish economy to global capital flows.

Mortgage loans in 2026: Why are installments standing still?

For the average mortgage holder, July 2026 is a month of disappointment. The lack of real changes in the household budget stems from the fact that commercial banks, in their installment calculations, take into account not only the NBP reference rate but also the risk margin and the situation in the interbank market. Since the interbank market prices geopolitical risk as high, the costs of money in interbank trading remain elevated. This blocks the possibility of offering cheaper loans to individual clients.

Every RPP decision is currently awaited with great tension, yet its impact on installments is increasingly limited by external factors. Even if the RPP decides on a symbolic cut in the future, its translation into a loan installment may be almost imperceptible if the situation in the currency market does not improve. Borrowers find themselves in a situation where their household budget depends on decisions made in Tehran or Washington, and not just in Warsaw.

The structure of loans in Poland, based largely on variable interest rates, makes households extremely vulnerable to market fluctuations. If we had a larger share of fixed-rate loans, the current RPP strategy would be less painful for Poles' wallets. Unfortunately, historical precedents have meant that most of the indebted still feel every impulse coming from the Monetary Policy Council meetings. The lack of changes in July 2026 is a signal to them that the period of high installments will last longer than originally assumed.

Economist forecasts: When will the breakthrough happen?

Financial market analyst forecasts are unequivocal: a breakthrough in monetary policy is postponed. Reaching an optimal level of interest rates that would allow for a permanent reduction in debt servicing costs is expected no sooner than the end of 2026. Until then, the market will balance between the desire to loosen policy and the necessity of protecting the currency. This is not a scenario that satisfies debtors, but it is the most likely one in the face of current challenges.

Economists point to one more aspect: the pace of economic growth. If the Polish economy begins to slow down, the RPP will have to choose between supporting growth through lower rates and protecting the currency. So far, price stability has been the priority, but in the second half of 2026, this vector may change. If inflationary pressure eases and the geopolitical situation calms down slightly, the Council may dare to take more decisive steps. For now, however, everything remains in a wait-and-see phase.

April 2026 forecasts indicated that the market was pricing the rate path too optimistically. Today's data confirm these warnings. Borrowers who planned their expenses based on forecasts from the end of 2025 must now make adjustments. This shows how unstable the financial market is when subjected to the pressure of external conflicts. There is no room for certainty; there is only room for risk management.

Summary of indicators for the Polish wallet

The decision made in November 2025 to begin a rate-cutting cycle was a moment when many believed in a quick release from high installments. The July 2026 RPP meeting finally buried those hopes in the short term. Stabilizing interest rates at 5.75% is a message to the market: the situation is too dangerous for risky moves. Borrowers must prepare for the fact that their installments will not fall in the near future in a way that would be noticeable in their daily budget.

The end of 2026 is the only real turning point. Until then, every RPP decision will maintain the status quo. This is not an ideal situation, but in the conditions of an economic war and tensions in the Middle East, it is the most responsible strategy for a central bank. Protecting the zloty is, after all, protecting the purchasing power of all Poles, not just those with loans.

For the indebted, the most important lesson from 2026 is understanding how much their situation depends on global processes. It is no longer just a matter of inflation in Poland; it is a matter of energy security, exchange rates, and the stability of international alliances. Each of these elements affects the NBP reference rate. A borrower in 2026 must therefore be an observer not only of the local real estate market but also of world politics.

What this means for you

The period of cheap money that so many were waiting for has been postponed. If you have a mortgage, you must assume that current burdens will persist at least until the end of 2026. On the other hand, those who have savings in deposits are gaining. Higher interest rates, while painful for debtors, are beneficial for those accumulating capital. This is a natural mechanism of wealth redistribution, which becomes even more pronounced in times of geopolitical uncertainty.

The catch is that the international situation is still fluid. If tensions between the USA and Iran escalate to the level of open armed conflict, the RPP may be forced not to maintain, but even to raise interest rates to defend the zloty against a sharp weakening. This is a black-swan scenario that is rarely talked about, but which must be included in every borrower's risk management.

Uncertainty is currently the only constant in the financial market. The RPP's decisions from July 2026 are proof that the central bank prefers to be seen as too cautious rather than irresponsible. For a borrower, this means the need to maintain financial liquidity and abandon optimistic scenarios assuming quick installment cuts. The stability of a household budget depends on preparing for worse, rather than better, developments.

Questions and answers

When did the RPP lower interest rates for the last time?

The last significant rate-cutting cycle began in November 2025. It was a move intended to initiate broader monetary policy easing, but it was slowed down by the changing geopolitical situation in the following months.

Do tensions in Iran affect my loan installments?

Yes, they affect them indirectly, but very significantly. Geopolitical tensions weaken the zloty, which forces the National Bank of Poland to maintain higher interest rates at 5.75% to protect the currency from imported inflation. If the situation were stable, the RPP would have more room for maneuver regarding cuts.

When will I realistically feel a drop in loan installments?

According to expert forecasts, reaching an optimal interest rate level that would allow for a real reduction in loan costs is possible no sooner than the end of 2026. Until that moment, the market does not expect sudden changes in interest rate tables.

Borrowers must learn to live in a world where interest rates are the result of decisions made thousands of kilometers from Warsaw. The RPP remains faithful to the principle of protecting currency stability, which for debtors means continuing to tighten their belts. Every subsequent Council decision will now be analyzed even more carefully for its impact on the zloty exchange rate, which puts loan holders in the position of observers of global conflicts. Their wallets have become one of the fronts in the international game over the price of money. A return to stable and low interest rates requires time, calm, and predictability, which are simply lacking in the current geopolitical situation. Borrowers must arm themselves with patience and prepare for a scenario where current high debt costs become the new normal, rather than a temporary anomaly. Ultimately, this is not just a matter of economics, but also of market psychology, which in 2026 is exceptionally sensitive to signals from the Middle East. Every subsequent month without cuts is a signal that the central bank's priorities remain unchanged. For debtors, this is a time of trial, where the most important skill becomes flexibility in managing one's own finances.

In the context of the coming months, the key parameter will be the zloty exchange rate. If the currency remains within predictable limits against the euro and the dollar, the RPP may gain space to discuss a small cut in December 2026. However, if the escalation in the Middle East intensifies, the reference rate may be maintained at 5.75% for much longer than original, even revised, forecasts assumed. Borrowers with variable-rate obligations should include a buffer in their budget plans in case the RPP decides to move in the other direction in the face of a commodity supply shock.

Financial stability for households in the face of such a high base rate requires, above all, discipline in consumer spending. Commercial banks, monitoring credit risk, are tightening lending policies, which further hinders the refinancing of existing debt on better terms. People looking for safe havens for their savings continue to benefit from high deposit interest rates, which creates a clear divide between debtors and creditors. This asymmetry will deepen until inflation falls to the statutory target and external conditions allow for loosening the grip of monetary policy.

At this moment, the only certain information for a borrower is the necessity of maintaining high financial liquidity. Every move in commodity markets, especially in the oil sector, is immediately priced in by the interest rate futures market. Institutional investors are already pricing in the risk of further inflation growth in the fourth quarter of 2026, which effectively blocks any expectations for quick relief in loan installments. In this reality, every holder of a variable-rate loan must reckon with the fact that the coming months will be a period of cost stabilization at the current high level.

From the central bank's perspective, the most important thing is protecting the value of money. The defensive strategy, consisting of keeping rates at 5.75%, is an expression of care to ensure that the real interest rate remains in relation to inflation at a level that does not encourage excessive credit consumption. This is painful for debtors, but from a systemic point of view, it constitutes a necessary safeguard against a scenario of losing control over price dynamics. In view of the above facts, borrowers should not set themselves up for quick changes, but for long-term debt management in an environment of elevated capital costs. This is not a situation anyone would wish upon Polish families, but it is an inevitable consequence of being part of the global financial system. Every RPP meeting until the end of 2026 will merely be a confirmation of these rules, until the moment when signals from the global economy allow for a safe return to lower debt servicing costs. It is therefore worth focusing on optimizing one's own budgets based on current, rather than wishful, economic parameters.

Sources

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