National Bank of Poland preview: holding steady, but it’s a close call

In December, Poland's short-term monetary policy outlook seemed clear. Following four consecutive rate cuts from September to December 2025, National Bank of Poland Governor Adam Glapiński and several Monetary Policy Committee members signalled a wait-and-see approach and a pause in monetary easing after the December policy meeting.

While this strategy seemed reasonable and was widely regarded by market analysts, including ourselves, as the baseline scenario, matters became more complicated after the release of the December flash CPI on the final day of 2025. Despite a low reference base from December 2024, headline inflation again fell to 2.4%YoY – below market expectations and, crucially, beneath the central bank’s 2.5% target (+/- 1 percentage point).

December inflation provides an important signal confirming that the disinflation observed in the second half of 2025 was a sustainable trend. We believe the Monetary Policy Council remains unconvinced that disinflation is permanent or that the core decline seen in 2H25 will endure. The MPC strongly relied on NBP projections, which throughout 2025 painted a much more pessimistic picture than reality. That explains why the NBP was so sensitive to low CPI releases in 2H25, and the December figure could be another signal challenging the governor’s wait-and-see stance.

Following the latest CPI release, the rhetoric among some policymakers has shifted. Certain rate-setters have suggested there is a 50/50 chance of further monetary easing in January. Indeed, we expect the debate to be intense, with another rate cut likely to be on the table. 2025 has clearly demonstrated that communication remains the weakest link in MPC policy, and policymakers appear highly sensitive to current inflation prints.

Nevertheless, a pause at the 14 January meeting remains our baseline scenario, though we assign a 35% probability to a rate cut. Regardless of the January decision, we anticipate three 25bp cuts over the course of this year.

In our view, the terminal rate stands at 3.25%, but downside risks dominate – particularly if price developments continue to surprise on the downside. According to our forecasts, CPI inflation is likely to remain below the NBP’s 2.5% target for most of 2026, and the risk of undershooting the target over the medium term is increasing.