Interest rates: Is 5.75 percent the end of stabilization?

In November 2024, the Monetary Policy Council (RPP) kept interest rates at 5.75 percent, a strategic move aimed at curbing inflation in the face of growing geopolitical uncertainty. This decision was a response to persistent price pressure, which remained a key challenge for the stability of the Polish currency that month. The Council members decided that limiting the dynamics of price growth remained the priority, even at the cost of a temporary slowdown in GDP growth.

Why did the RPP say 'stop'?

Maintaining rates at 5.75 percent was the result of an assessment of the risks the economy faced in the fourth quarter of 2024. CPI inflation, for which precise data published by Statistics Poland (GUS) at the time indicated the persistence of price processes in the services sector, forced policymakers to adopt a wait-and-see approach. Instead of starting a cycle of cuts, the RPP chose a defensive scenario. Any easing of monetary policy in the face of tensions between the USA and Iran could have led to a sharp depreciation of the zloty.

For the financial market, this decision meant keeping the cost of money at a high level, which directly affected the valuations of debt instruments. Treasury bond yields, reacting to the Council's statement, consolidated at higher levels. Institutional investors interpreted this as a lack of consent for fiscal stimulus financed by cheap liquidity. The Council did not want to risk a repeat of the scenario from previous years, where easing policy too early resulted in a resurgence of inflation expectations.

Within the Council, there was a consensus on the need to maintain real interest rates at a level that would limit private consumption. This mechanism was intended to slow down the circulation of money in the economy. Analysis of data from the end of 2024 confirms that wage pressure in the corporate sector was so high at the time that any rate cut could have been interpreted by the labor market as a signal for further aggressive wage increases.

Geopolitics and the cost of money

Tensions in the Middle East, particularly the escalation of the conflict involving Iran, posed a direct risk to the stability of energy prices in Poland. The commodities market reacted to every announcement coming from that region, which translated into volatility in the USD/PLN exchange rate. As the dollar became more expensive, imported energy carriers became costlier for Polish importers, which automatically pushed up the consumer inflation index. The RPP had to take this external factor into account, treating it as a significant brake on rate cuts.

A weak zloty during periods of geopolitical tension acted as an inflationary catalyst. The Monetary Policy Council, aware of this mechanism, decided that keeping interest rates at 5.75 percent was the cheapest form of insuring the country against a currency shock. From the central bank's perspective, exchange rate stability was more valuable at that moment than marginal support for borrowers.

The interdependence between oil prices and RPP decisions became clearer in 2024 than ever before. Investors monitoring the futures market knew that any information about blockades in sea straits hit Poland's balance of payments. The central bank could not afford the luxury of ignoring these phenomena. Keeping rates at a high level was intended to attract foreign capital seeking higher returns at an acceptable risk, which provided a buffer for the zloty.

The credit market in the shadow of the RPP decision

WIBOR, which serves as the base for most mortgage loans in Poland, reacted to the November RPP decision by remaining in the range above 5.80 percent. For borrowers, this meant that the costs of servicing debt did not budge by even a basis point. In 2025, after a series of market analyses, it turned out that loan installments fell only symbolically, which resulted from the fact that the market valuation of money was ahead of the Council's decisions by only a few basis points.

The situation of borrowers with variable interest rates became a flashpoint for public debate. In 2025, the average reduction in a loan installment amounted to only about 30–50 PLN for every 100,000 PLN of capital, which was imperceptible when compared to the cost of living. Banks, by keeping margins at a relatively high level, effectively neutralized the effects of the slow easing of monetary policy. There was no "cheap money" that many had hoped for after the end of the rate hike cycle.

An analysis of creditworthiness from that period indicates that risk modeling by commercial banks became extremely conservative. Financial institutions, fearing further geopolitical turmoil, required clients to have higher down payments and higher disposable incomes. In practice, this meant that access to mortgage loans in 2024–2025 was limited to a narrow group of people with high financial liquidity.

For businesses, the situation looked even more difficult. The cost of working capital loans, based on the WIBOR rate plus a bank margin, made it impossible to plan long-term investments. SME sector companies that did not have a fixed interest rate hedge in 2024 were forced to make drastic cuts in operating costs. The lack of a rate cut in November 2024 was a direct signal that the "cheap debt" policy had been postponed.

The road to the optimal rate level in 2026

It was not until November 2025 that the market saw a clearer move from the Monetary Policy Council, which was described as the "second autumn quarter." It was a signal that the rate-cutting cycle was gaining momentum but remained under control. Experts from the financial sector, analyzing forecasts for 2026, pointed out that the optimal level of interest rates – enabling a balance between fighting inflation and economic growth dynamics – would not be reached before the end of 2026.

This process was characterized by a high degree of uncertainty. Even when the RPP began to lower rates, it did so very cautiously, avoiding sudden jumps. Each Council meeting was preceded by an analysis of inflation data and the situation in international trade. From the perspective of September 2026, it is clear that the "small steps" strategy was the only one that allowed for avoiding a shock to the banking sector.

Economists pointed out that the Polish economy had entered a phase of long-term adaptation to moderate money costs. There was no talk of returning to the era of zero interest rates. This phenomenon, called by analysts the "new normal," forced investors to change their capital allocation strategy. Corporate bonds became a more attractive alternative to deposits, which testified to the maturity of the financial market in the face of higher rates than those the market had become accustomed to before 2020.

Forecasts prepared for 2026 pointed to the stabilization of rates around values that were to guarantee a real positive return for savers. This meant the end of the era of "negative real interest rates," which in the long term was beneficial for the financial stability of households, although painful for current consumption financed by debt.

Comparison of RPP decisions over the years

In November 2024, the 5.75 percent level was a barrier that the Council did not want to cross. It was a time when the overriding goal was to "anchor" inflation expectations. Comparing this to November 2025, when the easing phase began, a clear paradigm shift can be seen. The RPP moved from defense to the gradual normalization of monetary conditions.

Key differences in the Council's approach in these two periods:

November 2024: The priority was stabilizing the zloty exchange rate and limiting inflationary pressure resulting from external shocks (raw materials, geopolitics).
November 2025: The priority became supporting the economy while monitoring core inflation, which began to show signs of fading.
2026 Forecast: Striving for an optimal level that would allow for sustainable growth without generating new macroeconomic imbalances.

It is worth noting that the dynamics of the decline in loan installments were smaller than the dynamics of the decline in base rates. Banks, seeking to protect their interest margins, reacted with a delay to the Council's decisions, which was an additional burden for borrowers. The difference between margins in 2024 and 2025 was minimal, which suggests that the banking sector in Poland showed great resilience to changes in monetary policy.

Conclusions for entrepreneurs and investors

For management in Polish companies, 2024 was a period of fighting for liquidity. Companies that did not have adequate financial hedging had to limit capital expenditures. From the perspective of September 2026, it is clear that those entities that focused on optimizing operating costs rather than credit expansion survived.

Stock market investors learned a lesson from that period regarding the importance of interest rates for stock valuations. Highly indebted companies were under pressure, while entities with large cash reserves benefited from high deposit interest rates. The market learned to live in a regime where the cost of money is a constant, not a variable that can be ignored in Excel spreadsheets.

The investment strategy shifted towards diversification. Treasury bonds, offering stable income, dominated the portfolios of individual investors. Understanding that the "optimal rate level" is a process, not a goal, allowed investors to better adjust their strategies to changing market conditions.

Companies that decided on interest rate hedging in 2024 can today boast better financial results than their competition. The cost of hedging, although high at the time, turned out to be an investment in predictability. It was predictability – not the level of rates itself – that became the most sought-after commodity on the Polish financial market in 2024–2026.

What this means for you

The RPP's November 2024 decision to keep rates at 5.75 percent was a signal to the entire market that the time of "cheap credit" had definitely passed. For savers, it was a positive signal – the real interest rate on deposits finally began to outpace inflation, which was a qualitative change after years of negative rates. For borrowers, especially those with variable interest rates, it was a signal to tighten their belts.

The catch was that the RPP's policy was – and still is – highly dependent on external factors. Poland, as an open economy, must to some extent import monetary policy from global markets. Tensions between the USA and Iran show that even if domestic inflation data looks good, an external shock can instantly change the balance of power. Your financial decisions – regardless of whether they concern a loan or savings – must take this element of uncertainty into account.

In 2026, as we approach the "optimal rate level," one should not expect a return to pre-pandemic times. The financial market has developed new risk assessment standards that will stay with us for longer. Understanding that interest rates are not just numbers in NBP tables, but the real cost of capital that shapes your daily life, is the most important lesson of recent years.

Questions and answers

Why did the RPP keep rates at 5.75 percent in 2024?

This decision resulted from the need to stifle persistent inflation and the desire to protect the zloty exchange rate from geopolitical risks that could lead to currency instability.

When can interest rate stabilization be expected?

Economist forecasts from the 2025-2026 period indicate that the optimal level at which interest rates can stabilize will be reached at the earliest by the end of 2026, provided that no new external shocks occur.

How did the situation in Iran affect Polish interest rates?

Geopolitical tensions increased uncertainty in global commodity markets, which affected the zloty exchange rate and forced the RPP to maintain a cautious monetary policy to prevent imported inflation through a weakening currency.

Did borrowers feel relief in 2025?

Relief for borrowers was limited. Despite the start of the cutting cycle, the pace of installment decreases was slow, and high bank margins and persistent cost pressure meant that the real burden on household budgets remained high.

What did entrepreneurs learn in 2024-2026?

Entrepreneurs had to implement more advanced interest rate risk management instruments and revise their investment plans, abandoning financing based on the assumption of a low cost of money.

Did the 2024 interest rate forecasts come true?

Forecasts varied, but most analysts correctly assumed that the path to cuts would be long and bumpy, which was confirmed by the Council's later decisions and the announcement that the target would only be reached in 2026.

What role did the zloty play in RPP policy?

The zloty exchange rate was treated as a safety indicator. Keeping rates at a higher level was intended to protect the currency from capital flight toward safe havens, which was crucial in the face of global political tensions.

Is the end of 2026 the final deadline for rate changes?

According to analyses from that time, the end of 2026 was indicated as the moment to reach an equilibrium point, but the final shape of monetary policy remained dependent on current macroeconomic data and the geopolitical situation.

Why didn't banks lower loan installments proportionally to RPP decisions?

Commercial banks, in their decision-making process, take into account not only the NBP reference rate but also the costs of acquiring deposits and risk margins, which remain at an elevated level during periods of uncertainty.

Did stock market investors learn from the RPP's decision?

Investors moved some of their capital toward safer debt instruments, recognizing that in a regime of elevated interest rates, the profitability of listed companies is subject to greater risk.

Was inflation in 2024 the main determinant of the RPP's decision?

Yes, fighting inflation was the priority, and keeping interest rates at 5.75 percent was intended to limit price dynamics, which at that time remained above the central bank's inflation targets.

What significance did the RPP's maintenance of rates have for the economy?

Keeping rates at a high level contributed to cooling private consumption and limiting investment activity, which was a deliberate action aimed at slowing down inflationary processes in the economy.

Sources

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