Ireneusz Dąbrowski from the Monetary Policy Council on further cuts in interest rates. There were specific predictions
— It seems that this is not the last rate cut, said Ireneusz Dąbrowski, member of the Monetary Policy Council, during a Monday conversation on TOK FM radio. He added that the reduction could take place as early as December or in the following months.
Dąbrowski emphasized that future decisions regarding monetary policy will depend on data, which makes it impossible to predict the exact date of the next reduction. He shared his personal view that the cycle of rate cuts could end at 3.5%.
The central banker expressed satisfaction with the current level of economic growth in Poland, but drew attention to potential inflation risks, specifically pointing to wage growth and loose fiscal policy as factors that could put pressure on price increases.
President Adam Glapiński said at the last conference on Thursday that in the “ideal” scenario, when inflation remains fully consistent with the 2.5% inflation target, the main interest rate should be 3.5-4.0 percent, and his personal opinion is that the target rate of 4.0 percent would be appropriatenot very high for the Polish economy.
In reports published on Monday, economists from Citi Handlowy and Alior Bank assessed the level to which interest rates in Poland may fall. The former assessed that cThe cycle of interest rate cuts is slowly coming to an end, and the target reference interest rate may amount to 3.75%.
“Since inflation will be low in the coming months, the Council may be tempted to make even deeper cuts. However, it will have to take into account the risk that the current and possible further reductions will result in a rebound in inflation with a certain delay, which will again threaten the achievement of the target,” they added. Let us remind you that it amounts to 2.5 percent. (with a tolerance of +/— 1 percentage point).
According to calculations by Citi Handlowy analysts, in the years 2005-2023 the median reference rate was 3.5%. in nominal terms and 0.7 percent in real terms. “Actually, that's it The Council could stop with cuts slightly above historical levels for the neutral rate should not be surprisingespecially in the situation of very loose fiscal policy, which the Monetary Policy Council is so afraid of,” they wrote.
According to Alior Bank economists, the NBP reference rate should drop to 3.50%. around mid-2026 This means that the Monetary Policy Council would have to – probably in three moves – reduce the cost of money by a total of 0.75 percentage points. Last week, the Monetary Policy Council reduced all NBP interest rates by 0.25 percentage points, including the reference rate to 4.25%. In total, since May, when cuts were resumed, rates have already decreased by 1.50 percentage points.
Optimistic NBP projection: GDP growth and low inflation
According to Alior experts, the latest NBP projection has a quite positive tone. On Friday, the central bank also presented its latest projection. The central projection path assumes that CPI inflation in 2025 will reach 3.7%, in 2026 it will amount to 2.9%, and in 2027 it will decrease to 2.5%. The central GDP path assumes growth in 2025 at the level of 3.4%, in 2026 at the level of 3.7%, and in 2027 at the level of 2.6%.
“The latest NBP projection published on Friday confirmed what could be initially concluded from the information after the MPC meeting. Compared to the July forecasts, the inflation path in 2025-2026 was lowered (by 0.2 percentage points) and cosmetically increased for 2027 (by 0.1 percentage points to 2.5%). This year, the average inflation is expected to be according to the National Bank of Poland, 3.7 percent, and next year 2.9 percent. We see little room for positive surprises next year (our forecast is 2.7 percent), which may be one of the reasons for cautious reductions in interest rates,” Alior Bank wrote in the report.
“On the GDP side, on the one hand, there is a certain deterioration this year (forecast revised down from 3.6% to 3.4% – although, in our opinion, a bit prematurely), which, however, is more than compensated by the expected much stronger expected growth in 2026 (revision of forecasts from 3.1% to 3.7%). The changes are largely due to the change in investment trajectories, which are growing slower this year than expectations, mainly due to public investments, and are to be more concentrated in 2026. Nevertheless, in general, the tone of the latest projection is quite positive. Inflation is coming down to the target with GDP growing quite solidly,” it added.
