The November projection of inflation and GDP provides grounds for further reductions in interest rates, but only on a small scale and probably after a break, possibly longer – economists estimate.
RAFAŁ BENECKI, ADAM ANTONIAK (ING)
“The previous communication declared that the Council was implementing “adjustments” in monetary policy, but the latest series of cuts resulted in a rather concentrated cycle of cuts in the cost of money. The Council's decisions resulted mainly from the decline in current inflation and improvement in its future prospects.
The risks to energy prices in Q4 2025, which were seen by the central bank but not by the market, did not materialize. The Monetary Policy Council is most likely also aware that the beginning of 2026 will not bring a significant increase in energy prices, as the updated tariffs of the Energy Regulatory Office (URE) will most likely be lower than those currently in force. Risks related to the entry into force of the ETS2 system are also postponed in time. Hence the phrase about improving inflation prospects “in the coming quarters” in the statement after the meeting.
Taking into account the significant scale of the reduction in the cost of money this year (150 basis points), the fact that the Council rarely decides to change monetary policy parameters in December, and the lack of a clear picture of the inflation situation at the beginning of the year, we may currently be dealing with a break in interest rate cuts of several months.
Data on January inflation, published in February, will be of a limited nature and will be revised after the CPI basket is updated in March, on the occasion of the publication of data for February. In this context, we expect that another rate cut may not take place until March. We expect inflation to remain close to the NBP target, which still leaves room for adjustment of interest rates. We still see the target level of the reference rate in the range of 3.5-4%, but it will probably be achieved in the middle of next year, not 2027 as we have assumed so far.
MILLENNIUM BANK
“However, the results of the macroeconomic projection published by the Monetary Policy Council suggest, in our opinion, that the Monetary Policy Council may refrain from further reductions in interest rates. The upward revision of inflation forecasts for 2027 and the expected acceleration of growth in the conditions of loose fiscal policy should convince caution in dosing further monetary easing. All the more so because this year interest rates dropped by 150 basis points.
Based on this, we believe that the coming months may keep interest rates unchanged. All the more so because the Council may want to wait for the clarification of the risks to inflation related to the development of regulated prices at the beginning of the year, the impact of the minimum wage on the dynamics of wages in the economy, or the impact of changes in the inflation basket on the inflation path. However, tomorrow's press conference by President Glapiński and the details of the macroeconomic projection, which will be published in the coming days, will be important for verifying this thesis.
The path of core inflation and wages will be particularly important in this context. However, we maintain our expectations regarding the target rate next year at 3.50%. However, the path to reach this level remains subject to increased uncertainty.
MONIKA KURTEK, BANK POCZTOWY
“The Monetary Policy Council did not surprise the financial markets today and reduced interest rates by 25 basis points for the fourth time in a row and for the fifth time this year. The scale of reductions is now 150 basis points. The main reason for such a decision was, as indicated in the statement after the Council meeting, the preliminary reading of October inflation at 2.8% yoy, which was lower than forecasts (both the market and the Monetary Policy Council itself). Moreover, the Council got acquainted with the latest CPI and GDP projection, prepared by the NBP, where, as expected, the inflation path for this year was significantly revised downwards, and this probably confirmed the Council even more in the belief that there is still room for reductions and that it is here and now.
After today's decision, we should expect a pause in the easing of monetary policy, but this is probably not the end yet. Looking at the latest NBP forecasts for CPI for 2026, it is clear that they are higher than average market forecasts, so at the beginning of next year it may turn out that the space for rate cuts increases again. The Council may be willing to cut rates again, in my opinion, in March 2026. At the end of next year, the reference rate may be at 3.50%. compared to 4.25 percent at the end of this year.”
PEKAO ANALYSIS
“And what about the new NBP inflation projection? There is a lot of good, although expected news. In 2026, inflation will be around 3%, in 2027 it will stay within the target. In addition, there is a strong upward revision of GDP growth for 2026. This is still a solid basis for further rate cuts (in our opinion -75 bp in the first half of 2026).”
JAKUB BOROWSKI, CREDIT AGRICOLE
“In our opinion, just like in October this year, the tone of the statement after the November meeting of the Council is not clear, and the Monetary Policy Council's stance in monetary policy remains unclear.
The content of the statement after the MPC meeting indicates that the main arguments that prompted the Council to ease monetary policy were the lower-than-expected preliminary estimate of inflation in October (…), as well as the results of the November NBP projection, indicating limited inflation pressure in 2026-2027. In our opinion, the space for interest rate cuts in the coming quarters remains limited, as indicated by the stabilization of inflation in 2026-2027 expected in the November projection at a level close to the Monetary Policy Council's target.
Therefore, we maintain our scenario, according to which the target level of the NBP reference rate, consistent with the macroeconomic balance, is 4.00%. As a consequence, another and last cut in interest rates by 25 basis points in the cycle. we expect in the first quarter of 2026. Support for this scenario is our short-term inflation forecast, according to which the price dynamics, driven by the effects of a low base for food and fuel prices, will increase to 3.5%. yoy in Q4 2026.
In the opinion of the Monetary Policy Council, taking into account the decline in inflation and the improvement in its prospects in the coming quarters, another adjustment of the NBP interest rates became justified in November.
The Monetary Policy Council at its meeting on On November 4-5, 2025, it reduced all NBP interest rates by 25 basis points, including the reference rate to 4.25%. The decision was in line with market expectations.
This was the fourth reduction in a row and the fifth in the whole of 2025. Earlier in 2025, the Monetary Policy Council reduced rates in October by 25 basis points, in September by 25 basis points, and in July by 25 basis points. and May this year by 50 bp. In total, in 2025, the Monetary Policy Council reduced the cost of money by 150 basis points.
On Thursday, November 6 at At 3.00 p.m. there will be a press conference of the President of the NBP, Adam Glapiński. (PAP Business)
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