NBP interest rates will fall further. Here are PZU's forecasts for next year

Easing monetary policy, in addition to consumption and the inflow of EU funds, will support Poland's economic growth in 2026 – wrote Jarosław Pachucki, PZU's chief economist, in a commentary published on Wednesday. In his opinion, NBP interest rates will drop to 3.5%. next year.

“The Central Statistical Office data on GDP growth in the country in the third quarter of this year confirmed our estimates. Seasonally unadjusted GDP increased by 3.7% y/y in Q3, after an increase of 3.3% in Q2 – this is the best reading in three years. After correcting the series representing GDP changes for the impact of seasonal factors, the quarterly growth rate was 0.8%, which is the same as in Q2 and almost three times higher than the average for the entire European Union (+0.3). percentage points q/q). In this respect, only Sweden and Cyprus are ahead of us. The cumulative economic growth in Poland since the fourth quarter of 2019 has been 16.9% and remains one of the highest in the EU. The structure of GDP changes will be published only at the beginning of December.

In his opinion, household consumption remains the main driving force of the economy. He added that he expected a return to growth in gross fixed capital formation, as evidenced by a marked acceleration in industrial production, especially in the capital goods segment.

“The relatively good condition of the Polish economy has been confirmed in the latest forecasts of the European Commission. According to autumn estimates published on November 17, the average annual GDP growth in Poland is expected to amount to 3.2 percent this year and 3.5 percent next year. The result places Poland among the leaders of economic growth in the EU: this year only Ireland, Malta and Cyprus will record faster development, and a year later – only Malta. Among the large economies of the EU Poland has no competition. For comparison, the euro zone is expected to grow at a rate of 1.3 percent in 2025 and 1.2 percent in 2026, and the entire EU – at 1.4 percent per year,” we read in the commentary of PZU's chief economist.

He stated that the good condition of the Polish economy is supported by the ongoing process of disinflation. He recalled that in October the prices of consumer goods and services increased by 2.8%. y/y compared to 2.9 percent from September. He added that core inflation slowed to 3%. y/y, which is its lowest reading since November 2019.

“The stable trend of falling prices provides room for easing monetary policy and an increase in real current income from household work, despite the recent slower nominal wage growth. We expect further interest rate cuts, although we do not rule out that a short pause is possible after the November cut (the key here to build a majority in the MPC seems to be the preliminary y/y CPU reading for November, which will be released on Friday),” we read in the commentary.

Pachucki maintained the forecast that inflation in the following months will remain within the permissible range of fluctuations of the NBP inflation targetalthough he added that temporary increases in the price growth rate are possible in the coming months, including due to base effects and changes in regulated prices. In his opinion, the impact of changes in regulated prices on inflation may be an uncertainty factor for which the Monetary Policy Council will want to wait.

“When this uncertainty disappears interest rates in Poland should fall further, in our opinion, even to 3.5%. at the end of next year” – wrote Jarosław Pachucki. – “Easing monetary policy, in addition to consumption and the inflow of EU funds to the real economy, will support Poland's economic growth in 2026. It will also provide a solid starting point in connection with the promising GDP result in the country in the fourth quarter of this year in the light of October data.” – he also wrote. (PAP)

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