Polish C.Banker Kotecki: Sees room for 100 bps of cuts in 2026

Polish C.Banker Kotecki: Sees room for 100 bps of cuts in 2026

Polish Central Banker Kotecki Predicts Further Interest Rate Reductions

Polish Central Banker Kotecki has indicated that there is room for a further 100 basis points (bps) of interest rate cuts in 2026. This prediction comes as the National Bank of Poland (NBP) continues to assess the economic landscape and inflation trends. Kotecki's remarks suggest a more accommodative stance compared to the current interest rate policy.

The NBP has recently revised its inflation forecast downward, projecting inflation to be "close to" 3% in the third quarter of 2025, down from the previous estimate of 3.4%. This revision reflects a combination of factors, including a likely drop in gas prices from July and the base effect from a year ago. However, the bank continues to forecast inflation growth in the fourth quarter due to higher electricity prices for households, although this scenario is highly unlikely [1].

Economic indicators such as wage growth and retail sales have shown positive trends. In April, wage growth in the enterprise sector accelerated to 9.3% year-on-year, while retail sales grew by 7.6% year-on-year. These developments, although favorable for consumers, have raised concerns among policymakers about potential pro-inflationary factors [1].

The Polish government expects the country's gross domestic product (GDP) to grow by 3.5% in 2026, with annual inflation expected to reach 3.0% next year. The European Commission's forecast that there will be no fiscal tightening in Poland in 2026 also supports a cautious approach to monetary policy [4].

Despite the positive economic indicators, the NBP remains cautious. Governor Adam Glapinski has stated that the MPC will not rush into action and will only order another interest rate cut after the summer. The central bank is awaiting further information on household electricity prices and the draft budget bill for 2026 before making a decision [1].

The Polish Monetary Policy Council (MPC) is expected to cut interest rates by another 50 basis points by the end of 2025, with further cuts of 100 basis points anticipated in 2026. This expectation has stimulated demand for housing loans, with approximately 38,600 people applying for such loans in May, an increase of over 8% compared to April [1].

Kotecki's prediction of a 100 bps cut in 2026 aligns with the current market expectations. Traders have been selling Polish Zloty/Euro (PLN/EUR) cross rate futures (Dec 2026) before the expiration date, indicating a belief in further interest rate cuts [2].

References:
[1] Warsaw Point: Interest rates down only after the summer. Available at: https://warsawpoint.com/news/82243-interest-rates-down-only-after-the-summer.html
[2] TradingView: Polish Zloty/Euro (PLN/EUR) Cross Rate Futures (Dec 2026). Available at: https://www.tradingview.com/symbols/CME-EPZ1%21/?contract=EPZZ2026
[4] Reuters: Poland factors to watch on June 13. Available at: https://www.tradingview.com/news/reuters.com,2025:newsml_L8N3SG0FA:0-poland-factors-to-watch-june-13/