Will loan installments fall in 2026? MPC decisions and the conflict in Iran

In July 2026, the MPC kept interest rates at their current level, citing uncertainty caused by the escalation of the conflict in the Middle East. This means no relief for borrowers in the near future. This decision, announced on July 8, 2026, definitively puts an end to speculation about a rapid easing of monetary policy in the third quarter of the current year. For millions of Poles paying off mortgage loans based on variable interest rates, the statement from the headquarters of the National Bank of Poland is unambiguous. The cost of money remains at 5.75 percent, which in practice means that repayment schedules will not undergo any favorable correction in August. For many families, the stabilization of rates at this level is a decision that pushes dreams of a lower installment into the indefinite future.

July MPC decision: why did interest rates remain unchanged?

The maintenance of the reference rate at 5.75 percent by the Monetary Policy Council results directly from a cautious assessment of external risks. Although domestic inflation shows signs of slowing down, geopolitical variables dominated the agenda of the July meeting. The escalation of the conflict between the USA and Iran has introduced a level of uncertainty to financial markets that prevents the central bank from taking the risk associated with lowering the cost of money. Under normal macroeconomic conditions, if economic fundamentals were the only determinant, the MPC could consider moving toward a dovish course. However, the current situation in the Persian Gulf region forces policymakers to adopt a defensive stance.

The mechanism holding the Council back is transparent: a rate cut amid pressure on energy commodity prices, caused by regional tensions, could lead to a sharp weakening of the zloty. A weaker currency means more expensive imports, and more expensive imports are a direct path to reigniting inflationary pressure. MPC members decided that the stability of the zloty is currently more valuable than immediate support for the household budgets of borrowers. Every fluctuation in the national currency exchange rate, caused by concerns about oil supply routes, is currently being carefully analyzed in terms of its impact on the average consumer's shopping basket.

The official statement after the meeting indicated that uncertainty regarding the further development of the situation in Iran means that inflation forecasts for the coming quarters are subject to a high degree of risk. In such an atmosphere, any easing of monetary policy would be perceived by the market as a premature step. Central banks around the world, observing similar threats, are refraining from aggressive cuts. Poland, due to the specific structure of its economy and high dependence on fuel prices, cannot afford to get ahead of the curve. For this reason, freezing rates at 5.75 percent is a technical decision, resulting from the desire to avoid a scenario in which inflation spirals out of control due to external causes.

Geopolitics and the Polish economy: the impact of the conflict in Iran

The relationship between the price of oil on global markets and the decisions of the MPC in Warsaw is stronger in 2026 than ever before. The US-Iran conflict is not just a political problem, but primarily an economic burden on Polish wallets. When the situation in the Middle East heats up, investors flee to so-called safe havens, selling off assets in developing countries like Poland. The zloty, being a currency that is inherently riskier, then loses value. This, in turn, forces the Monetary Policy Council to keep rates at a high level to protect the purchasing power of money.

For a Polish borrower, this means that their installment is directly linked to events in Tehran or Washington. Every piece of information about a possible blockage of trade routes in the Persian Gulf region translates into higher inflation expectations in Poland. The MPC, operating within its mandate to protect the value of money, must react to these signals. If the conflict dies down, the pressure on the zloty will fall, which will open space for cuts. However, if the situation escalates, rates may remain at their current high level much longer than initially assumed in the forecasts from the beginning of the year.

Economists point out that this impact is not immediate, but spread over time. First, the currency market reacts, then the fuel market, and finally, with some delay, the central bank makes its decisions. In July 2026, the MPC found itself at a point where further cuts could have been interpreted as a sign of weakness, which would have immediately weakened the zloty. Faced with such a puzzle, the decision to keep rates at 5.75 percent was the only logical move from the perspective of macroeconomic stability. Geopolitics has ceased to be a background for the economy, becoming the main director of monetary processes.

Borrowers in limbo: what do the decisions mean for your wallet?

Maintaining interest rates at 5.75 percent is painful for people with variable-rate mortgage loans. To understand the scale of this burden, let's look at specific calculations. Let's assume we have a mortgage loan of PLN 300,000, taken out for 20 years, with a bank margin of 2 percent. With a reference rate of 5.75 percent, our total interest rate is 7.75 percent. The monthly principal and interest installment in such a model oscillates around PLN 2,448.

If the MPC had decided on a symbolic cut of 0.25 percentage points, the interest rate would have fallen to 7.50 percent. The installment in such a scenario would be about PLN 2,415. The difference is therefore PLN 33 per month. On an annual basis, this means savings of PLN 396. Although for a single household this amount may seem small, on the scale of the entire economy and all borrowers, the lack of this cut means that there is a total of billions of zlotys less in household budgets than there could have been with a more dovish policy.

With higher debt, for example, a loan of PLN 500,000, the difference in the installment with a cut of 0.25 percentage points would already be about PLN 55 per month, which amounts to PLN 660 per year. The lack of a rate drop also means that any hopes for faster repayment of capital are pushed into the future. Borrowers are still paying high interest, which makes up the lion's share of their monthly installment. Banks, taking advantage of the high cost of money, keep margins at a stable level, seeing no need for aggressive competition for the client through reductions in offer interest rates. As a result, Poles' wallets are hostages to decisions made in the quiet of offices on Świętokrzyska Street in Warsaw, which in turn are determined by events thousands of kilometers away.

For holders of variable-rate loans, the July MPC meeting means an extension of the period of high debt service costs. In previous years, when rates were low, the installment of a PLN 300,000 loan was significantly lower, often not exceeding PLN 1,800. Today's PLN 2,448 is a real burden for many families, forcing them to give up other expenses. The stabilization of rates at the current level does not bring relief, but cements a state of high living costs. Borrowers must prepare for the fact that until the conflict in the Middle East is extinguished and the zloty regains its stability, no positive changes in repayment schedules will take place.

Forecasts for the end of 2026: when will we see changes?

Forecasting the future of monetary policy in such unstable conditions is a challenge even for the most experienced analysts. Back in November 2025, when the cycle of cuts seemed secure, economists pointed out that we would reach the optimal level – which would bring significant relief to borrowers – at the earliest by the end of 2026. The July 2026 decision confirms that this optimistic scenario is being pushed back in time. Currently, everything indicates that 2026 will pass under the sign of maintaining high rates, and possible cuts may be postponed to 2027.

A factor that could change this state of affairs is the extinguishing of tensions in the Middle East. If relations in the Persian Gulf region stabilize in the fourth quarter of 2026, the central bank may gain room to maneuver. However, as analysts point out, the translation of an improvement in the geopolitical situation into MPC decisions is not immediate. It takes time for the currency market to react and for inflation to stabilize at a low level. For this reason, even if the situation in the world improves in October or November, the first real rate cuts may only occur at the turn of the year.

For borrowers, this means the necessity of revising household finances in terms of continuing to bear high debt service costs. One should not count on gifts from the central bank in the form of sudden cuts. The "wait-and-see" strategy adopted by the MPC is safe for the financial stability of the state, but costly for individuals. It is also worth paying attention to forecasts regarding the inflation level. If it starts to fall permanently, and not just seasonally, the arguments against rate cuts will start to lose strength, even with the ongoing conflict in Iran. Nevertheless, at this moment, the priority of policymakers remains preventing price increases, which in practice means keeping a finger on the pulse and avoiding hasty decisions.

Institutional positions: PIE on the future of monetary policy

The Polish Economic Institute (PIE) consistently points out in its analyses that the decisions of the Monetary Policy Council are strictly dependent on external factors. The institute's experts emphasize that the Polish economy is in a specific position. On one hand, we are dealing with fading internal inflation, and on the other, with strong imported pressure resulting from geopolitics. In PIE's assessment, the MPC has very limited room for maneuver. Any attempt to cut rates at a time when oil is becoming more expensive due to armed conflicts would be risky and could lead to the destabilization of the zloty.

The PIE position also sounds a warning against too much optimism. The institute points out that the cycle of cuts has not been permanently interrupted, but only suspended. This is a very important distinction. The Council has not closed the road to cheaper credit, but has set a high threshold for entering the easing phase. That threshold is calm in international markets. PIE suggests that until we see a permanent stabilization of energy prices, the MPC will not make any move. This means that borrowers must get used to current installments as the new norm for the coming months.

It is worth noting that analytical institutions such as PIE often act as a voice of reason in public debate. While the media may speculate about rapid cuts, experts keep their feet firmly on the ground, analyzing data on production, consumption, and exchange rates. Their message is clear: there is no room for wishful thinking. MPC decisions are cold and pragmatic. If the situation in the world allows, rates will fall. If not – they will remain at 5.75 percent. This approach, although frustrating for people paying off loans, protects the economy from sudden shocks. From an institutional perspective, stability is more important than short-term relief for selected social groups.

The zloty under pressure: the currency market in the face of crisis

The currency market is a barometer of geopolitical sentiment in 2026. When information about the escalation of the conflict in Iran appears in the media, the zloty immediately loses value against the euro and the dollar. This mechanism is well known to investors. A weak zloty means more expensive imports of fuel, gas, and consumer products, which directly drives up inflation. In such a situation, the MPC cannot afford to cut rates, as it would further weaken the national currency.

The Council's strategy of keeping rates at 5.75 percent is essentially an attempt to defend the zloty. High interest rates attract foreign capital, which helps keep the exchange rate at a stable level. If the MPC were to cut rates during a crisis, capital could flow to safer havens, which would cause a sharp depreciation of the zloty. This, in turn, would lead to a so-called inflationary spiral that would not be easily stopped. Therefore, the MPC prefers to endure criticism for high loan installments than to allow the destabilization of the currency market.

For investors, the situation is clear. As long as the conflict in Iran does not die down, the zloty will remain under pressure. Investors will price geopolitical risk into the currency, which will force the MPC to maintain a restrictive policy. This is a vicious circle from which an exit is only possible through an improvement in the situation in the Middle East region. For the average Pole, this means that the exchange rate is currently more important for their loan installment than any other macroeconomic data. The stability of the zloty has become a priority, and the price for this stability is paid by borrowers in the form of unchanged, high installments.

What this means for you

The MPC's decision to keep rates at 5.75 percent means that you must plan your household budget for the coming months assuming no changes in the installment amount. Your obligation to the bank remains constant, regardless of whether inflation in the country is falling or not. Remember that you are not the only player in this puzzle. Those saving on bank deposits can enjoy higher interest on their funds, which is the other side of the high-rate policy coin.

The catch that is rarely talked about is so-called imported risk. Even if the Polish economy performs well, external price shocks may force the central bank to maintain a restrictive course. This means that any forecast assuming a rapid drop in loan installments should be treated with a large dose of skepticism. In the current geopolitical situation, patience is not only recommended but even necessary. If you are planning larger expenses, take into account that debt service costs will not fall in the near future.

Commercial banks in Poland, observing the MPC's decisions, show no desire to lower margins. In an environment where the reference rate is 5.75 percent, bank margins remain at a stable level, which protects the financial sector's profits but at the same time cements high credit costs for individual clients. There are no signals that any correction of mortgage offers in favor of borrowers will occur in the third quarter of 2026. On the contrary, banks are tightening creditworthiness assessment criteria, which means that even people with high incomes may have difficulty refinancing existing debt on better terms.

For people considering taking out a new mortgage loan in 2026, the situation is equally demanding. High interest rates mean that assuming a constant installment, creditworthiness is limited, and the sum of interest that must be paid to the bank over the term of the contract is several dozen percent higher compared to periods when interest rates were around 1-2 percent. This phenomenon creates a barrier to entry into the real estate market, which in turn affects demand and housing prices, which in many regions of the country remain at very high levels.

It is also worth noting that MPC decisions translate not only into mortgage loans but also into consumer and installment loans. Every financial product based on a variable rate, linked to the NBP reference rate, is currently more expensive to service. Borrowers who took out cash loans for renovations or the purchase of home furnishings feel this burden even faster than mortgage holders, due to shorter repayment periods and less resistance to changes in the cost of money.

From a macroeconomic perspective, maintaining high interest rates is a signal that the economy is not yet fully prepared for a credit recovery phase. The MPC is sending a clear message: the priority is fighting inflation risk, not stimulating consumption through cheap lending. Such an approach, although it may seem restrictive, is aimed at avoiding a scenario in which a sudden increase in money on the market would trigger price pressure that could not be controlled with available monetary tools.

For the reader, this means one thing: the survival strategy in 2026 should be based on a conservative approach to personal finance. Assuming that loan installments will fall in the coming months is fraught with a high risk of error. Instead, it is better to prepare for a variant in which current debt service costs will remain with us until the end of the year, and perhaps even longer. Having a financial cushion becomes in this context not only good advice but a necessity to avoid liquidity problems in the event of unforeseen expenses.

The evolution of the situation in the Middle East remains the biggest unknown. Every intelligence report, every piece of information about troop movements in the Persian Gulf region or OPEC+ decisions regarding oil production, has a direct impact on what will happen at subsequent meetings of the Monetary Policy Council. Observing the exchange rate and Brent oil prices is therefore the duty of every conscious borrower who wants to predict the next move of the central bank.

In summary, the July 2026 decision is proof of how much the local economy is dependent on global processes. There are no longer simple relationships where a central bank's decision depends solely on domestic inflation readings. Today, every decision is a resultant of many factors, most of which lie beyond the control of Polish policymakers. Borrowers must accept this new reality, in which geopolitics affects monthly expenses more than the decisions of local politicians.

Faced with such a complex situation, it is also worth paying attention to forecasts regarding interest rate levels in the longer term. Even if the conflict is extinguished, the process of returning to lower rates will be slow. The MPC will want to avoid a situation in which a rate cut that is too fast leads to an inflation shock. This means that even after tensions subside, borrowers should not count on drastic and sudden drops in installments. It will be a slow process, spread over many months.

Ultimately, the most important lesson from 2026 is the necessity of building financial resilience to external shocks. People who based their finances on the assumption that rates would always fall may feel disappointed. However, those who adopted a cautious strategy have a chance to get through this difficult period without major turbulence. Financial stability is the greatest luxury these days, and MPC decisions only confirm what a difficult task faces everyone who manages their household budget in the shadow of global crises.

Questions and answers

Did the MPC lower interest rates in July 2026?

No, the Monetary Policy Council decided to keep interest rates at an unchanged level of 5.75 percent, citing high geopolitical uncertainty.

How does the conflict in Iran affect my loan installments?

The escalation of the conflict in the Middle East increases uncertainty in the markets, which exerts pressure on the zloty and raises the risk of imported inflation. To counteract these phenomena, the MPC keeps rates at a high level, which prevents the reduction of credit costs.

When can interest rates realistically fall?

Forecasts indicate that the Polish economy may reach the optimal level at the earliest by the end of 2026, provided that there is a permanent stabilization of geopolitical tensions in the Persian Gulf region.

How much higher is my installment due to the lack of a cut?

Assuming a loan of PLN 300,000, the lack of a 0.25 percent cut means that the installment is about PLN 33 higher per month compared to a scenario in which the reference rate would have been lowered by the Council.

Does the situation on the currency market matter to the MPC?

Yes, the stability of the zloty is an absolute priority for the central bank, which tries to avoid imported inflation resulting from the weakening of the national currency against major world currencies.

Is it worth counting on cuts in the third quarter of 2026?

Given the current position of the MPC and the international situation, the chances of significant cuts in the coming months are minimal, as the priority remains protecting the value of money.

What is the biggest threat to my wallet in 2026?

The biggest threat remains geopolitical unpredictability, which may force the central bank to keep interest rates high for a period much longer than market analysts initially assumed.

Sources

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