Will interest rates fall in 2026? We check the forecasts

The Monetary Policy Council kept interest rates at 5.75 percent back in November 2024, and further cuts in 2026 remain dependent on the escalation of the conflict in the Middle East and the stability of the zloty. This decision, taken in the face of growing geopolitical uncertainty, froze the cost of money at a level that has become an insurmountable barrier for many Polish borrowers. For nearly two years, the central bank has been pursuing a wait-and-see policy, where the priority is no longer fighting domestic inflation, but protecting the Polish currency from external shocks.

Foundations of monetary policy after November 2024

November 2024 became a caesura that defined the current financial landscape. It was then that the Monetary Policy Council, despite pressure from the banking sector and some political circles, decided to keep rates at 5.75 percent. This was a strategic decision aimed at anchoring inflation expectations in conditions where global supply chains began to tremble. Since then, each month has brought new signals suggesting that a return to looser monetary policy is being pushed further into the future.

The mechanism that was activated at that time is based on a simple assumption: as long as the external environment remains hostile, the domestic central bank will not take the risk of loosening monetary policy. From the borrower's perspective, that MPC meeting was a signal that the era of cheap credit had definitively come to an end. Stabilizing rates at this level is not merely a lack of decision, but an active form of securing the financial system. In July 2026, as we observe subsequent Council meetings, it is clear that the scenario from the autumn of 2024 has become the foundation from which central bankers do not intend to deviate without hard evidence of an improvement in the situation in the region.

Geopolitics as the main factor holding back the economy

Modern Polish monetary policy has ceased to be an autonomous process dependent solely on data from the Statistics Poland (GUS) or GDP forecasts. Today, every move toward cuts is corrected by information flowing from the Middle East. Analyses published in July 2026 leave no doubt: the US-Iran conflict has transformed into the most important macroeconomic variable that the MPC must face. The intensification of military operations in this region immediately translates into the valuation of energy commodities, which causes a domino effect in the Polish economic system.

The Polish Economic Institute points out that further decisions on interest rates will be directly dependent on the scale of this conflict's escalation. The risk transmission mechanism is transparent: rising tension in the Middle East weakens the zloty against major reserve currencies, such as the dollar or the euro. A weaker currency, in turn, imports inflation, raising energy and fuel costs, which automatically forces the Monetary Policy Council to maintain a restrictive stance. When the zloty loses value, any interest rate cut would be perceived by the markets as a signal for a further sell-off of Polish debt, which would consequently worsen the domestic currency's exchange rate even further.

Analysts emphasize that in such conditions, the MPC has no room for maneuver. Even if consumer inflation indicators in Poland show a downward trend, the exchange rate risk remains high enough that any loosening of monetary policy would be playing with fire. Foreign investors, who flee to so-called safe havens in the face of geopolitical uncertainty, exert constant pressure on the Polish financial market. As a result, keeping the cost of money at 5.75 percent is the only tool that allows for any stability to be maintained.

Forecasts for 2026: Why optimism is premature

Forecasts regarding the interest rate path in 2026, which seemed promising back in April, now require a thorough correction. Many financial institutions, including Direct Money analyses, pointed to the possibility of starting a cycle of cuts in the middle of the year, but reality has verified these assumptions. Instead of the expected reduction, the market received confirmation of the continuation of the high-rate cycle, which is the result of overlapping domestic factors and global instability.

An economist speaking to Forbes in November 2025 assessed that we would reach the optimal interest rate level at the earliest by the end of 2026. This thesis, although formulated several months ago, seems to be the most realistic scenario in July 2026. This means that for most of the year, borrowers should not expect significant changes in their monthly burdens. The debt market is currently pricing in stabilization, which means that any cuts – if they happen at all this year – will be symbolic and limited to a minimum, likely by 0.25 percentage points, provided there is a lasting calming of the situation in Tehran and Washington.

For entrepreneurs planning investments based on debt financing, this information means the necessity of revising business plans. The high cost of capital, which was acceptable in conditions of dynamic economic growth, is becoming a significant brake in the current environment. The decline in demand for investment loans is clear, and commercial banks are tightening criteria for granting financing, which further limits the growth dynamics of the private sector. From a macroeconomic perspective, 2026 therefore appears as a time of stagnation in monetary policy, where the only factor that could force a change is a deep external shock that no one on the Council wants to take responsibility for.

The zloty under pressure: A mechanism of monetary defense

The exchange rate of the zloty has become a hostage in 2026 to events over which Poland has no influence. The currency market reacts to every dispatch from the Middle East, and the volatility of the USD/PLN pair is currently one of the highest in the Central and Eastern European region. The MPC, by keeping rates at 5.75 percent, is effectively pursuing a policy of currency defense. It is a costly strategy, but in the current reality, it is considered the only right way to avoid a spiral of zloty weakening and rising prices of imported goods.

It is worth noting that this defensive stance has its side effects. High interest rates on deposits, which theoretically should favor savers, are in practice offset by inflation, which nevertheless remains at an elevated level compared to the NBP's inflation targets. Borrowers are in the most disadvantageous situation – their installments remain high, while the real value of their wages, due to the cost of living, is not growing at a rate that allows for comfortable debt servicing.

This situation creates a kind of "interest rate trap." The Monetary Policy Council cannot raise them because it would kill economic growth, and it cannot lower them because it would collapse the zloty's exchange rate. As a result, the only way out is to remain at the current equilibrium point. This approach, although frustrating for consumers, is pragmatic from the point of view of the banking system's stability. Any move upward would be perceived as a sign of crisis, and any move downward as a capitulation to inflation. Therefore, from a technical point of view, interest rates in Poland resemble a frozen clock that will only start moving when the international environment allows for the pressure to be taken off the Polish currency.

Evolution of MPC decisions: A comparative analysis 2024-2026

Tracing the Monetary Policy Council's decisions over the last two years allows us to understand how much the paradigm of money management in Poland has changed. In November 2024, when the 5.75 percent rate was set, the main goal was to control the inflation shock after the pandemic and energy crisis period. It was a time of hope that a rapid cycle of hikes would be followed by an equally rapid cycle of cuts. However, 2025 brought a brutal collision with geopolitics, which was visible in the Council's communication, which became increasingly laconic and cautious with each subsequent decision.

Comparing these two periods, a clear change in rhetoric is visible. While in 2024 Council members discussed mainly wage and consumption dynamics in the country, in 2026 the main point of reference is reports on military tensions and exchange rate stability. This shift in emphasis shows that the Polish economy has become fully dependent on global processes over which monetary oversight has very limited room for maneuver.

It is worth recalling reports from November 2025, which suggested that the path to cuts was open. At that time, many analysts predicted that by mid-2026, rates would fall to 5 percent. Today, after a series of events in the Middle East, these forecasts are outdated. Currently, the market is focusing on whether the Council will maintain the current level until the end of the year, or whether it will be forced to revise upward, which, in the context of recent media reports from July 2026, seems to be a risk that is being taken more and more seriously.

Conclusions for the market: What this means for your wallet

For the average mortgage holder, the lack of changes in interest rates is news of maintaining the status quo. On one hand, this means no sharp increases in installments, which is positive information, but on the other – no hope for quick relief. Stabilizing the cost of money at 5.75 percent means that for the coming quarters, household budgets will have to be planned with the current, high costs of debt servicing. There is no room for the optimism that accompanied borrowers in 2022-2023, when the market was waiting for a breakthrough.

What does this mean in practice for your finances? First of all, the necessity of maintaining high budgetary discipline. From the bank's perspective, rates at this level mean that credit risk is constantly monitored. Customers who were counting on refinancing loans based on lower rates must postpone these plans to an indefinite future. The only strategy currently is to wait out the cycle, which in practice means that holders of variable-rate loans are in the most difficult situation.

On the other hand, those with savings in term deposits are gaining, although this gain is often offset by inflation, which is rarely mentioned in official communications. However, it is worth remembering that in the current economic environment, the stability of the zloty is valued higher than stimulating consumption through cheap loans. This is a fundamental change in the central bank's philosophy of operation, which will affect Polish finances for years to come.

Prospects for the second half of 2026

The second half of 2026 will be a time of verifying forecasts for the Polish economy. If the escalation in the Middle East intensifies, the MPC will have to face the question of whether 5.75 percent is a sufficient level to protect the zloty. Possible scenarios even assume the necessity of NBP currency interventions, which would be the final confirmation that the situation has slipped out of the control of purely monetary tools. On the other hand, if the geopolitical situation stabilizes, a small window for cuts opens, but they will certainly not be aggressive.

Borrowers should prepare for a scenario in which high installments become the new norm, not a temporary anomaly. Understanding the mechanisms behind the Council's decisions allows for better risk management. This is not the time for taking on new, risky obligations, but for optimizing current costs. Every move toward lower rates will be preceded by long months of waiting, and the Monetary Policy Council's communication will likely remain in defensive mode, avoiding declarations that could be perceived as a signal for a zloty sell-off.

In the final analysis, 2026 will go down in the history of Polish monetary policy as the year of the "great suspension." The lack of significant moves on interest rates is the best proof that the global economy is so strongly interconnected that local central bank decisions lose significance in the face of grand geopolitics. For Poles, this means the necessity of adapting to a world where cheap money is only a memory, and financial stability is bought at the high cost of debt servicing.

Questions and answers

Did interest rates fall below 5 percent in 2026?

The Monetary Policy Council's decisions to date and the analysis of geopolitical factors indicate that interest rates are remaining at 5.75 percent. Forecasts assume that reaching a level below 5 percent is unlikely in this calendar year due to inflationary pressure and currency risk.

Why does the conflict in the Middle East have such a large impact on my loan installments in Poland?

This conflict affects the valuation of energy commodities, which translates into a weakening of the zloty's exchange rate. A weak currency forces the MPC to maintain higher interest rates to protect the economy from imported inflation, which directly translates into maintaining the high cost of variable-rate loans.

When does the MPC make key decisions on rates and where to look for reliable information?

The Council meets regularly every month, and every decision is preceded by a press conference of the NBP President. The most reliable data regarding future decisions come from analyses published by institutions such as the Polish Economic Institute and official NBP communications after Council meetings.

Did the forecasts from the beginning of 2026 about cuts come true?

Most forecasts assuming rapid monetary policy loosening in the first half of 2026 proved too optimistic. The current situation in international markets forced analysts to revise assumptions and push back expectations regarding monetary policy loosening to the end of the year or even to 2027.

What should a borrower do in the face of such an uncertain situation?

Experts recommend focusing on maintaining financial liquidity and avoiding excessive debt. In the current environment, where stability is a priority for the central bank, the best strategy is to plan a budget assuming the current, elevated costs of debt servicing for a longer period.

Sources

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