Interest rates at 5.75%: How does the 2024 decision shape our current situation?

Maintaining rates at 5.75 percent in November 2024 halted the cycle of hikes; however, from the perspective of September 2026, analysts point to the necessity of an upward adjustment due to inflation exceeding 3.5 percent. This decision in 2024 was accurate as a stabilization tool, but today, in conditions of a strong economy, it has exhausted its potential. Continuing to hold rates at this level is becoming a burden that prevents effective action against an overheating economy and price pressure.

November 2024: The starting point for monetary policy

On November 6, 2024, the Monetary Policy Council decided to keep the reference rate at 5.75 percent. At the time, this move was perceived as a signal that the aggressive monetary tightening cycle, which had accompanied the Polish economy during previous years of fighting inflation, was coming to an end. Policymakers opted for stabilization, believing that the hikes implemented until then were sufficient to bring price dynamics to the inflation target in the medium term. Commercial banks and financial markets received this message as a sign of a long waiting period, which allowed many borrowers to make their financial plans more realistic.

The assumptions at the time were based on forecasts that anticipated a gradual fading of demand pressure. No one assumed that nearly two years later, domestic macroeconomic indicators would diverge so clearly from the strategy adopted then. Maintaining the cost of money at an unchanged level for such a long time in the face of changing macroeconomic fundamentals, such as strong GDP growth, has created a new economic reality.

In 2026, the discussion about interest rates is no longer about whether the hikes were needed, but about how much the current inaction limits the space for the NBP. From the perspective of September 2026, it is clear that the November 2024 decision was merely freezing the problem, not solving it. The economy, which in 2024 needed stimulation and certainty, today requires cooling tools that the Monetary Policy Council consistently avoids, sticking to parameters from nearly twenty-four months ago.

Impact on borrowers: The balance sheet after two years

For those with variable-rate mortgage loans, the November 2024 decision was a period of relief. The stabilization of the reference rate at 5.75 percent meant predictable installments, which, in the era of market uncertainty at the time, had a measurable impact on the stability of household budgets. For subsequent quarters, borrowers did not have to struggle with sudden spikes in debt service costs, which translated into increased consumption and a more stable real estate market.

However, the long-term maintenance of high rates in conditions where inflation has again begun to exceed 3.5 percent has changed the nature of this burden. Borrowers who expected a gradual loosening of monetary policy were confronted with a harsh reality. Instead of the expected installment cuts, the market began to price in the risk of further hikes. Credit Agricole BP analysts, tracking the situation in 2026, indicate that external financing costs for the private sector have become a permanent cost element, which, combined with inflation, is realistically eroding the purchasing power of Poles.

This situation is dangerous because, over the last two years, there has been an acclimatization to the 5.75 percent level. Installments that seemed acceptable in 2024 are becoming an increasing challenge in 2026. A shift toward higher debt service costs, should the Monetary Policy Council decide on an upward move, will be a signal for many households to radically cut spending. From the borrower's perspective, the 2024 stabilization was merely a postponement of the need to adjust to a higher level of money costs, not the end of the tightening cycle.

2026 Forecasts: Why is inflation back on the agenda?

September 2026 brings readings that are a warning signal for most economists. Inflation persistently exceeding the 3.5 percent barrier is proof that price processes in the Polish economy have not been fully extinguished. In its third-quarter 2026 reports, Credit Agricole BP clearly indicates that at the current pace of economic growth, keeping interest rates at 5.75 percent is insufficient to fight inflationary pressure.

The mechanism is simple: strong economic growth drives demand, which, under conditions of limited supply of certain goods and services, translates directly into price increases. The Monetary Policy Council, sticking to the 2024 decision, is on the defensive. From an economic point of view, keeping real interest rates at a low or negative level in the face of rising inflation is an incentive for further price increases. Experts forecast that if the MPC does not decide on a hike of at least 25-50 basis points in the coming months, price dynamics could spiral out of control.

Furthermore, attention should be paid to the structure of inflation. It no longer results only from external factors, but increasingly from internal wage pressure and a strong labor market. In 2024, one could argue that rate hikes could stifle economic growth. In 2026, this argument loses its significance because the economy shows great resilience, and the biggest threat has become persistent inflation. A change in the central bank's rhetoric seems to be only a matter of time, and any delay only increases the cost of future disinflation for the economy.

Geopolitics and the zloty: External pressure in 2026

Geopolitics in 2026 has become one of the main factors determining the decisions of the Monetary Policy Council. The escalation of tensions between the US and Iran, which intensified in July 2026, led to a drastic increase in uncertainty in financial markets. The Polish currency, as an emerging market asset, became a natural target for investors fleeing risk. Pressure on the weakening of the zloty translates directly into so-called imported inflation, which further complicates the situation for the MPC.

Maintaining rates at 5.75 percent in conditions of a weakening currency is risky. If the zloty loses value, the costs of imported raw materials, energy, and consumer goods rise, which automatically pushes up the CPI index. The Monetary Policy Council, even though it could afford a dovish approach in 2024, faces the necessity in 2026 of choosing between supporting economic growth and protecting the value of the currency. Financial market analysts in their July 2026 reports emphasize that the escalation in Iran is a "black swan" whose effects may force the NBP to raise interest rates even against the wishes of the Council members.

External pressure is not limited only to the exchange rate. It also applies to energy prices, which are correlated with the situation in the Middle East. The rise in oil and gas prices, caused by unrest in this region, is a direct pro-inflationary impulse. The Polish economy, being strongly integrated with global markets, cannot afford passivity in the face of such risks. The November 2024 decision, assuming stability, in confrontation with the July 2026 situation, turns out to be ill-adapted to changing international conditions. Every week of delay in reacting to these factors increases the risk of a permanent depreciation of the zloty and a deterioration of the country's macroeconomic prospects.

Economic fundamentals: Labor market and industry

Strong economic growth in 2026 is a fact that changes the perception of monetary policy through the prism of industrial productivity and the condition of the labor market. In 2024, when the MPC made the decision to freeze rates at 5.75 percent, there were fears of a slowdown. Today, data indicate high industrial production dynamics and low unemployment, which under normal conditions should be a signal to tighten monetary policy. Instead, we are dealing with a situation where this policy remains in opposition to the business cycle.

The labor market in Poland shows signs of overheating. Rising wages, resulting from a shortage of workers, translate into price pressure in the service sector. Companies, wanting to maintain margins, pass higher labor costs on to the final consumer, which fuels a wage-price spiral. In 2024, at a rate of 5.75 percent, this was still a controlled phenomenon. Two years later, without an appropriate reaction from the central bank, this process has become the main source of internal inflation.

Industry, which in 2024 had to adapt to capital costs of 5.75 percent, is operating in completely different conditions in 2026. High investment dynamics, often financed by loans, show that the current level of interest rates is not restrictive for the economy. This fact is one of the strongest arguments of Credit Agricole BP analysts for the necessity of a hike. Since the economy is growing despite such high costs, it means that rates should be even higher to effectively limit excess demand and bring inflation down to the target.

A comparison of key parameters indicates the necessity of redefining the strategy:

CPI inflation: persistently above 3.5 percent (Credit Agricole BP data, September 2026)
NBP reference rate: 5.75 percent (level set in November 2024)
GDP dynamics: strong growth, exceeding expectations from 2024.
Zloty exchange rate: under geopolitical pressure (July 2026, sources: INNPoland.pl).

The economy cannot function in a vacuum. If the fundamentals point to overheating, keeping rates at the level of two years ago is risky not only for inflation but also for the stability of the entire financial system. Companies that planned investments in 2024 based on the predictable cost of money must now face the uncertainty resulting from the lack of an MPC reaction to the changing environment.

What's next? Scenarios for interest rates

Scenarios for the coming months after September 2026 are limited. The first is a rate hike, which seems increasingly likely in the face of inflation data. Such a move would be a clear signal that the MPC is returning to fulfilling its primary mandate, which is ensuring price stability. Even a small upward correction, on the order of 0.25 percentage points, could calm the markets and curb the depreciation of the zloty.

The second scenario is continuing to hold rates at 5.75 percent. Such a strategy, although convenient for borrowers, carries the risk of "entrenching" inflation. If the central bank ignores the signals coming from the economy, it may lead to a situation where the fight against high prices will have to be much more brutal in the future. The history of monetary policy teaches that delayed reactions always cost the economy more than actions taken at the right moment.

The third scenario, assuming rate cuts, seems unrealistic in the current conditions. Any attempt to loosen monetary policy with inflation above 3.5 percent and an unstable situation in the Middle East would be perceived by investors as a signal to sell off the zloty. The MPC is aware of this risk, which is why it has avoided radical cuts in recent months, despite pressure from parts of the market.

For borrowers who enjoyed relative stability throughout 2024-2025, a time of expectation verification is coming. Regardless of whether the MPC decides to hike at the next meeting or delays until the end of the year, the trend is clear. The era of cheap money, understood as rates below the inflation level, has definitely ended. The economy requires higher rates to balance demand with supply, and for the average Pole, this means the necessity of revising household finances.

What this means for you

As a consumer and borrower, you must prepare for the fact that the 5.75 percent level was only a stop, not the target point of monetary policy. The year 2026 brings new challenges that require greater financial discipline from each of us. If you have a variable-rate loan, it is worth checking how your installment will change in the event of a rate hike of another 0.5 percent. Do not count on quick cuts – macroeconomic data indicate that fighting inflation will be the main priority of the Monetary Policy Council in the coming quarters. The stability we felt in 2024 was the result of specific conditions that no longer exist today.

Questions and answers

Are interest rates in 2026 higher than in 2024?

In November 2024, rates were 5.75 percent. In 2026, this level remains unchanged, but analysts, including those from Credit Agricole, point to growing pressure to raise them due to inflation exceeding 3.5 percent.

How does the situation in Iran affect my loan installments?

Geopolitical tensions destabilize the zloty exchange rate, which increases inflationary pressure. This, in turn, limits the space for the MPC to lower interest rates and forces policymakers to maintain a restrictive stance, which prevents loan installments from falling.

When can changes in interest rates be expected?

Market experts, based on strong economic growth and persistent inflation, suggest that rate hikes may become a real scenario in the coming months if macroeconomic data do not improve.

Why is inflation above 3.5 percent so important for the MPC?

It is the upper limit of deviations from the NBP's inflation target. Persistently exceeding this barrier in conditions of a strong economy forces the central bank to act to cool demand and protect the value of money, which usually involves interest rate hikes.

What does "strong economic growth" mean for my finances?

Strong economic growth with high inflation usually leads to higher interest rates. This means more expensive credit, but also potentially higher wages; however, in the short term, for most people, it means higher debt service costs and rising prices in stores.

Sources

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