This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
Interactive chart For context, inflation in January was 2.2% year-on-year, indicating that price growth remains slightly below the midpoint of the inflation target. The February reading will be released on March 13. Between May and December 2025, the total scale of rate cuts amounted to 1.75 percentage points. The first two months of 2026 saw a pause in monetary easing.
Arguments for the cut: Disinflation and slowing wage growth
What arguments may have persuaded the Council to lower rates? First, the firmly entrenched disinflation evident in the data. January’s reading was the lowest since March 2024 (2%), although that earlier figure was a one-off. To find a period when inflation remained consistently slightly below the target, one would have to go back as far as 2018 and the first half of 2019.
Even so, the release from Poland’s statistics office (GUS) came in noticeably higher than the market consensus (1.9% year-on-year). It is also worth bearing in mind that a revision of the weights in the inflation basket still lies ahead. Last year this revision reduced January’s inflation by 0.4 percentage points compared with the initial estimate.
Another argument for some members of the Monetary Policy Council may have been the sharp slowdown in wage growth. In January, nominal wages in the enterprise sector rose by 6.1% year-on-year, down from 8.6% in December 2025. That marks the weakest wage growth in nearly five years (since early 2021). The reading was well below market expectations. Moreover, across the economy as a whole, wage growth is likely lower than in the enterprise sector. Smaller-than-expected pay increases ease inflationary pressure.
Arguments against: Strong growth and geopolitics
Counterbalancing these trends is the economy’s solid momentum, reflected in robust retail sales data. GDP growth accelerated to 4% year-on-year in the fourth quarter of 2025.
Over the weekend, the United States and Israel launched an attack on Iran, significantly increasing uncertainty in global markets. Above all, the outlook for energy prices has become unclear. Brent crude has risen by 12% since the start of the conflict (as of Tuesday evening). Shipping through the Strait of Hormuz has almost come to a halt. Liquefied natural gas production in Qatar has also been suspended. As a result, LNG prices have risen sharply on European markets. At the same time, the Polish zloty weakened significantly against the dollar over two days. Currency depreciation is inflationary because it raises the price of imports.
No one can currently predict how persistent or how large the supply shock linked to the attack on Iran may prove to be. Markets have calmed somewhat today following reports that Iran may be willing to open talks on ending the war. In reality, however, many scenarios remain on the table – and it was under such conditions of uncertainty that today’s decision had to be made.
The key forecast
Clearly, the arguments for a rate cut proved stronger than the risks stemming from geopolitical uncertainty.
The most compelling factor for members of the Monetary Policy Council was likely the results of the National Bank of Poland’s (NBP) latest macroeconomic projection. According to the forecast, inflation is expected – with a 50% probability – to fall within the range of 1.6–2.9% in 2026 (compared with 1.9–4.0% in the November 2025 projection), 1.1–3.7% in 2027 (versus 1.1–4.1%), and 0.9–4.0% in 2028.
Meanwhile, annual GDP growth is projected – with a 50% probability – to fall within the range of 3.1–4.7% in 2026 (compared with 2.7–4.6% in the November 2025 projection), 2.0–3.8% in 2027 (versus 1.5–3.7%), and 1.8–4.1% in 2028.
In other words, the inflation outlook for the current year has been revised markedly downward – by around 0.6–0.7 percentage points compared with the November projection – while GDP growth has been revised upward by roughly 0.2–0.3 percentage points for 2026–2027. I have illustrated this in the chart below.
Interactive chart