How much will you pay for your loan? MPC decisions vs. the Middle East crisis

In brief

In July 2026, the MPC halted the interest rate cut cycle, responding to pressure on the zloty exchange rate.
PIE experts point out that future decisions will be closely correlated with the development of the conflict in the Middle East.
Economists predict that a return to the optimal interest rate level is possible no sooner than the end of 2026.

Why did the MPC halt rate cuts?

July 2026 brought a cold shower for borrowers. The Monetary Policy Council decided to keep interest rates at their current level, thereby closing the door to cheaper money in the middle of the summer. The Council members left no illusions: the external situation is too unpredictable to continue the monetary easing cycle started the previous year.

The main brake for the decision-makers at the National Bank of Poland turned out to be the escalation of tensions between the USA and Iran. The conflict, which seemed possible to extinguish in the spring, gained momentum in mid-summer, hitting global financial markets. For the MPC, this was not just a geopolitical headline, but a concrete indicator of inflationary risk. Instability in the Middle East traditionally translates into rising energy commodity prices, which is the worst-case scenario for the Polish economy, still struggling with remnants of price pressure.

Added to this is the weakness of the zloty. In July, the Polish currency came under strong market pressure, caused by capital flight to safe havens. Foreign investors, frightened by the specter of an open armed clash in the region, sold off emerging market assets. In such an atmosphere, any interest rate cuts that could further weaken the national currency and drive up import costs would be an extremely irresponsible move. Experts from the Polish Economic Institute had already indicated that the path of interest rates would depend directly on the development of events in the Middle East. The Council's July meeting confirmed that these warnings were fully justified. Instead of relief in installments, we have a firm adherence to the status quo. The markets received a clear signal: we will have to wait for cheaper credit until the dust in the Middle East settles at least a little.

Geopolitics as a brake on monetary policy

In mid-2026, the Monetary Policy Council is firmly holding its course, keeping interest rates at an unchanged level. Borrowers' dreams of cheap money have collided with brutal reality. This is not a result of the weakness of the Polish economy, but a derivative of events thousands of kilometers away from us. The unstable situation in the Middle East effectively blocks any monetary policy easing.

Everything boils down to oil, gas, and market uncertainty. The escalating conflict forces investors to flee to safe havens, which directly hits emerging markets, including Poland. The zloty is under constant pressure, and a weakened currency is a straight path to higher imported inflation. The MPC cannot afford a mistake when every unrest in the Middle East translates into the valuation of assets along the Vistula.

Analysts from the Polish Economic Institute made the matter clear in a report dated July 18, 2026. Future decisions of the Council are a hostage to the scale of this conflict's escalation. This statement casts a shadow over the second half of the year. Instead of easing, we have a wait-and-see policy. Geopolitical risk has ceased to be just a headline in news services, becoming a real factor affecting the mortgage installments of millions of Poles.

For the average mortgage holder, this means one thing: stagnation. There is no room for optimism as long as a barrel of oil reacts with violent jumps to every move of troops or diplomats in the Persian Gulf region. MPC members do not want to risk additional demand stimulation when an external inflationary shock can hit the national wallet at any moment. Stabilization has become synonymous with security in this situation, although for debtors, it is an extremely expensive defense.

Borrowers in limbo: what do the data say?

For thousands of Poles paying off mortgage obligations, today's reality is primarily a disappointment. The Monetary Policy Council, despite earlier market hopes for easing, remains unyielding. The unstable situation in the Middle East, combined with clear pressure on the zloty, has effectively frozen any downward moves, which in mid-2026 means maintaining debt service costs at their current high level for borrowers.

Hopes for relief in household budgets turned out to be futile, and the argumentation coming from the NBP is clear: currency security and resilience to geopolitical shocks now have priority over the pace of economic growth. This is a cold shower for those who were counting on quick drops in installments.

It is worth recalling a brutal lesson from the past, which shows that optimism can be premature. Data from December 28, 2025, clearly showed that even at times when the MPC decided to cut interest rates, the installments of some loans remained completely unchanged. Banking mechanisms do not always translate one-to-one into the client's wallet.

Here is what the current stagnation means in practice for household finances:

The lack of further cuts in 2026 directly translates into maintaining current debt service costs, which for many households excludes an improvement in financial liquidity.
The situation from December 2025 proved that banks have tools to neutralize the effects of monetary policy for some of their products, so even a possible future cut does not guarantee an automatic reduction in expenses.
The escalation of the conflict in the Middle East, which the Polish Economic Institute warned about in July 2026, has permanently influenced the MPC's strategy, making any forecasts of installment drops fraught with a huge risk of error.

Borrowers are stuck in limbo. Counting on cheap money in the face of global political tensions is becoming a purely wishful strategy, not a financial one.

Forecasts for Poland: when will the breakthrough happen?

For mortgage holders, hopes for quick installment cuts in mid-2026 turned out to be futile. The Monetary Policy Council remains unyielding, and the main reason for this defensive strategy is the geopolitical situation. The instability in the Middle East and the resulting pressure on the zloty have effectively frozen the space for monetary policy easing. Any move toward cheaper money could now dangerously weaken the national currency, which for Council members is an unacceptable risk.

A few months ago, the market tried to sense the intentions of the decision-makers, but the signals remained contradictory. As early as April 13, 2026, Direct Money analysts indicated in their forecasts a high degree of uncertainty regarding the pace of changes, which in retrospect turned out to be an extremely accurate intuition. Today we see that this caution was justified, and further decisions depend on variables over which the MPC has no influence. This is confirmed, for example, by the July statement of the Polish Economic Institute, which directly points to the escalation of the conflict in the Middle East as the main factor hindering any downward moves.

When, then, can we expect real relief in our wallets? Optimism died a long time ago. It is worth recalling the analysis of Forbes economists from November 6, 2025, who dampened enthusiasm after the autumn cuts. Experts then predicted that we would reach the optimal interest rate level no sooner than the end of 2026. Today's reality seems to confirm this pessimistic scenario. Instead of quick drops, a long waiting period awaits us, in which the amount of installments will remain a hostage to global tensions, not the domestic economy. We will have to wait at least a few more months for a breakthrough, provided that the situation on the international stage allows for a breather.

Evolution of MPC decisions in the last year

As recently as last autumn, borrowers could count on a breather. On November 5, 2025, the Monetary Policy Council decided to cut interest rates, which was already the second such decision in that autumn series. At that time, the market reacted enthusiastically, and Business Insider Polska (November 5, 2025) confirmed that this move would translate into concrete reductions in principal and interest installments. It seemed that we were entering a stable cycle of monetary easing, and further downward moves were only a matter of time.

However, moods cooled down quickly. Just a few weeks later, at the end of December 2025, the media, including TVN24 (December 28, 2025), dampened emotions, reporting that the installments of some loans did not budge despite earlier cuts. The year 2026 brought completely different challenges. In April, Direct Money forecasts (April 13, 2026) indicated high uncertainty, and the summer months brought a brutal collision with geopolitics. The US-Iran conflict, which escalated in July, effectively blocked any room for maneuver for the MPC.

Below is a summary of the key turning points that defined monetary policy in the last twelve months:

Interest rate cut (second autumn quarter) — November 5, 2025 (Bankier.pl)
Impact of the decision on loan installments — November 5, 2025 (Business Insider Polska)
Announcement of no changes in installments despite earlier cuts — December 28, 2025 (TVN24)
Forecasts of interest rate levels in 2026 — April 13, 2026 (Direct Money)
Maintaining interest rates in the face of US-Iran tensions — July 8, 2026 (INNPoland.pl)
Analysis of the dependence of MPC decisions on the situation in the Middle East — July 18, 2026 (Portal Samorządowy)

Today the situation is clear. Instability in the Middle East and the pressure exerted on the zloty make any monetary policy easing impossible in mid-2026. The MPC has become a hostage to geopolitics. Hopes for cheaper money have been shelved.

Summary of the NBP strategy

In mid-2026, the Monetary Policy Council is firmly keeping its foot on the brake. The decision to keep interest rates at an unchanged level is the result of a simple calculation: geopolitics takes precedence over the desire to relieve borrowers. The situation in the Middle East, where tension between the USA and Iran continues to escalate, effectively blocks any room for monetary policy easing. The zloty remains under enormous pressure, which forces decision-makers to be extremely cautious.

The MPC's priority remains the stability of the Polish currency in conditions of high global volatility. Any attempt to prematurely lower the cost of money in the current reality could have the opposite effect, weakening the zloty and fueling imported inflation. Analysts from the Polish Economic Institute signaled as early as July that further moves up or down would be directly correlated with the development of the conflict in the Middle East. There is no room for random decisions here.

Financial institutions unanimously warn against premature optimism about cheap credit. Hopes for quick installment drops, which seemed justified by the autumn cuts at the turn of 2025 and 2026, have been brutally verified by reality. The market must come to terms with the fact that the path to the optimal level, which was speculated about just a few months ago, remains long.

The catch is that for the borrower, a state of limbo is almost as expensive as high interest rates themselves. The financial liquidity of households in the third quarter of 2026 remains a hostage to external factors over which the NBP has no influence. Hopes for "cheap money" must be shelved. Stabilization, not a cut, is currently the only realistic scenario the Council can afford.

What this means for you

For the average Pole, this means the continued maintenance of high mortgage costs. Those saving on deposits gain, borrowers lose, and geopolitical uncertainty in the Middle East becomes the main risk factor for the household budget.

Questions and answers

Will interest rates fall in 2026?

Forecasts indicate that a return to the optimal interest rate level is possible no sooner than the end of 2026, provided the international situation stabilizes.

How does the US-Iran conflict affect my loan?

Geopolitical tensions weaken the zloty, which forces the MPC to keep rates at a higher level to protect the currency, which directly translates into the amount of installments.

Why did the MPC not decide to cut in July 2026?

The decision stems from the need to respond to market pressure and external risks that limit the space for monetary policy easing.

Sources

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