Interest rates 2026: can borrowers count on relief?

The Monetary Policy Council (MPC) is keeping interest rates unchanged, which in practice means no significant installment reductions for most borrowers. These decisions stem from the need to stabilize the zloty in the face of the escalating conflict in the Middle East. For millions of Poles with variable-rate mortgage loans, this means an extended period of high debt servicing costs with no prospect of immediate relief for household budgets.

Facts: The MPC and the current state of affairs

The July 2026 meeting of the Monetary Policy Council brought the resolution that the market expected, but which many borrowers did not want to believe. The main reference rate was maintained at 5.75 percent. This decision is a continuation of a policy that was intended to be only temporary, but in practice has become a permanent element of the economic landscape. Since the beginning of 2026, the macroeconomic environment has changed in a way that has forced members of the Council to adopt a wait-and-see attitude.

The current 5.75 percent is not just a figure in a National Bank of Poland (NBP) announcement. It is a barrier that separates the economy from a period of cheaper money. Borrowers who assumed a gradual easing of monetary policy in their financial plans have collided with a hard reality. The lack of cuts means that bank margins and WIBOR rates, on which most loan agreements are based, show no downward trend. The MPC, through its passivity, is sending a signal that the priority is to protect the value of money in conditions of heightened external uncertainty.

It is worth looking at the numbers that translate into everyday life. With a mortgage loan of 500,000 zlotys, taken out for 25 years with a bank margin of 2 percent, the installment at current interest rates oscillates around 3824 zlotys. If the MPC had decided on a symbolic cut of 0.25 percentage points, the interest cost of the capital would have changed. In such a scenario, the monthly installment could have fallen by about 115–125 zlotys. Although this amount may seem small on a monthly basis, on an annual scale it means savings of around 1500 zlotys. The lack of this cut is a real loss for the borrower's wallet, which is acutely felt under current inflationary pressure.

Causes: Geopolitics as the main brake

Why is the MPC not deciding on cuts, even though domestic macroeconomic data often suggested such a possibility? The answer lies outside Poland's borders. The escalation of the conflict between the USA and Iran and the general destabilization of the situation in the Middle East have created conditions in which the Polish central bank must be guided primarily by the protection of the national currency.

The zloty is an emerging market currency. In moments of geopolitical tension, foreign capital instinctively withdraws from assets considered risky. Investors look for safe havens, such as the US dollar or the Swiss franc. If the MPC were to decide to lower rates when markets are volatile, it could lead to a sharp depreciation of the zloty. A weaker currency means more expensive imports, which in turn translates into higher inflation, especially in the area of energy raw materials and fuels.

This mechanism is brutal in its simplicity. The NBP faces a dilemma: lower rates to help borrowers, or keep them at a high level to protect the purchasing power of money. The choice fell on the latter. The Portal Samorządowy, in its July 2026 analyses, indicated that the Council's further moves will be strictly correlated with the situation in the Middle East. Every impulse coming from that region, affecting oil or gas prices, is analyzed by the MPC in terms of risk to Polish inflation. As a result, monetary policy has ceased to be autonomous to the extent we have become accustomed to. It has been dominated by variables over which Warsaw has zero influence.

XTB analysts point to one more aspect. The market is no longer pricing in quick cuts; what's more, in extreme scenarios, if the conflict were to intensify, there is even talk of the risk of rate hikes. This is a radical change in narrative compared to the end of 2025, when the market lived in hope of a quick exit from the restrictive cycle. Currently, every MPC decision is preceded by a currency risk analysis. Stabilizing the zloty has become the primary goal, which effectively blocks any actions stimulating the credit market.

Consequences: The borrower's wallet in limbo

The lack of changes in interest rates has concrete consequences for households. Borrowers who were counting on relief in the third quarter of 2026 must verify their financial plans. The freezing of rates means that debt servicing costs remain at a level that is already at the limit of endurance for many budgets.

For a mortgage holder, this means a lack of so-called fiscal space. If installments do not fall, other expenses – for education, health, or housing maintenance – must be limited. This is visible in consumption data. Households that are burdened with loans for most of their income show less propensity for voluntary spending. This, in turn, translates into a slowdown in the dynamics of economic growth.

Moreover, maintaining rates at 5.75 percent for a long time changes the structure of savings. People with free financial resources opt for term deposits and treasury bonds, which is beneficial in the short term, but in the long term, it pulls capital out of investment circulation. The credit market is becoming less attractive to new property buyers, which leads to stagnation in the construction sector. Developers, seeing lower demand, are limiting investments, which in the future may result in a shortage of housing on the market.

It should be emphasized that this situation is not the fault of the banks themselves, but the result of general monetary policy. Commercial banks operate within the framework set by the MPC. Their margins remain relatively stable, but the cost of financing credit operations is directly dependent on the price of money on the interbank market. As long as the MPC does not change its strategy, banks have no room for maneuver to offer cheaper credit products. In this arrangement, the borrower is a passive party that must adapt to the conditions imposed from above.

Forecast: When can we realistically count on changes?

Forecasting in current conditions is fraught with a huge risk of error. An economist quoted by Forbes.pl as late as the end of 2025 suggested that the optimal level of interest rates would be reached no sooner than the end of 2026. Data from April 2026, published by Direct Money, indicate that this process will be gradual and slow.

Will the end of 2026 bring a breakthrough? Much depends on two factors. First, on the easing of tensions in the Middle East. If the conflict is extinguished or its effects on global fuel markets are neutralized, the MPC will gain room for action. Second, on the condition of the Polish zloty. If the currency stabilizes and stops reacting nervously to reports from the world, the central bank will be able to return to the standard model of inflation management, in which the main parameter is the domestic CPI indicator, not the exchange rate.

However, looking at the current mood, one should be a moderate optimist. Even if cuts do occur, they will not be rapid. The MPC is an extremely conservative institution that prefers to "wait out" a period of uncertainty rather than make risky decisions that might require a quick reversal in the future. This means that any monetary policy easing cycle will be spread out over time. Instead of quick cuts of 0.5 or 1 percentage point, one should expect a series of small adjustments of 0.25 points, spread over several quarters.

For the reader, this means that 2026 will not be a time of respite. People repaying loans should assume in their household budgets that the current level of installments will be maintained at least until the beginning of 2027. Any financial surpluses should be allocated to overpaying the principal, which is the most effective method of reducing the total cost of a loan in a high-interest-rate environment. Such a strategy allows for partial independence from the decisions of the Monetary Policy Council and brings tangible benefits, regardless of what happens in Washington or Tehran.

It is also worth following the communications coming directly from the NBP. Every subsequent press conference of the central bank president after an MPC meeting is a key source of knowledge. That is where one should look for signals of a change in rhetoric. If concern for economic growth begins to dominate over concern for the exchange rate in the Council's messages, it will be a clear signal that we are approaching a change in the cycle. At the moment, however, priorities remain unchanged, and debt servicing costs for millions of Poles remain at a high, stable level.

Risk analysis: What is really holding back the NBP?

The main factor holding back NBP decisions is so-called imported inflation. In an economy as open as the Polish one, the exchange rate acts as a fuse. If the zloty loses value, the prices of goods imported from abroad rise at an almost immediate pace. The MPC is aware that lowering interest rates with a weak zloty would be like adding fuel to the fire.

The situation between the USA and Iran, which services like INNPoland.pl mention, goes beyond the framework of a typical regional conflict. It is a struggle for influence that has a direct impact on the prices of energy raw materials. Poland, as a country still heavily dependent on fossil fuel imports, is particularly exposed to supply shocks. Every increase in the price of a barrel of oil on global stock exchanges is interpreted by the MPC as a threat to the inflation target.

In this context, the Council's decisions are not an expression of hostility toward borrowers, but an expression of fear of losing control over inflation. If inflation were to spiral out of control, the cost of living for all citizens – not just borrowers – would rise drastically. The MPC, as the guardian of the value of money, must prioritize the stability of the entire system over the immediate needs of one social group.

For an economic analyst, the picture is clear. The Polish economy is in a "waiting" phase. This is not a desirable state, but in current geopolitical conditions, it is the only safe solution. No movement is also a move – in this case, it is a defensive strategy. Borrowers must come to terms with the fact that their financial obligations are currently strictly linked to events over which they have no influence. It is a bitter pill, but understanding this mechanism is key to maintaining calm in managing one's own capital.

Conclusions for the wallet

The Monetary Policy Council is keeping interest rates at an unchanged level, which for most borrowers means a continuation of the financial status quo. Since July 2026, the situation has remained stable in its form that is unfavorable to debtors. The lack of movement from the Council means that the installments of most obligations will remain at the current, high level.

The cause of this state of affairs goes far beyond the domestic backyard. Decision-makers in Warsaw are clearly afraid of the unpredictability of global markets. The escalation of the conflict in the Middle East, including the intensifying rivalry between the USA and Iran, creates a cocktail of uncertainty. The MPC is betting on the stabilization of the zloty, which is susceptible to sharp fluctuations in the face of geopolitical tensions. The "wait and see" strategy by the MPC means that the cost of capital will not fall until the international environment regains at least a semblance of stability.

What does this mean in practice? A conservative approach to debt is becoming a necessity, not a choice. Investors who were counting on cheap money to drive the economy must verify their expectations. The financial market is now pricing in a scenario in which the high cost of debt servicing will be with us for longer. If someone was counting on a "breather" in the household budget in the third quarter of 2026, it is time to revise plans. The MPC clearly prioritizes the protection of the currency over relief for citizens' wallets, and the signals coming from the Council do not give hope for a quick turnaround. In this game, the winner is the one who has liquidity, not the one who counts on quick rate cuts.

What this means for you

For the average borrower, this means a continuation of high debt servicing costs. Savers on deposits gain, people with variable-rate mortgage loans lose, and the catch is the dependence of MPC decisions on external factors over which Poland has no influence.

Questions and answers

Will loan installments fall in 2026?

At this moment, the MPC is maintaining rates at 5.75 percent, which means that loan installments remain at a stable, high level. There are no indications of cuts due to the geopolitical situation.

Why is the MPC not lowering interest rates?

MPC decisions are blocked by geopolitical risks, including the conflict in the Middle East, which negatively affects the zloty exchange rate and generates inflationary risk.

When can real changes in NBP rates be expected?

According to economists' forecasts, reaching the optimal level of interest rates is possible no sooner than the end of 2026, provided the international situation stabilizes.

Is the current level of rates final?

No. The situation is dynamic. If the escalation of the conflict in the Middle East intensifies, markets do not rule out even a scenario of rate hikes, which would be an even greater burden for borrowers.

How can borrowers cope with high installments?

In current conditions, the most recommended strategy is to overpay the loan principal, which allows for a reduction in the interest calculation base, regardless of the Monetary Policy Council's decisions.

Sources

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