Poland leaves key interest rate at 3.75% as inflation rises to 4.0%

Rate freeze across benchmark borrowing costs

The Monetary Policy Council held Poland's benchmark interest rate at 3.75% on 7 October 2026, keeping borrowing costs unchanged following a two-day meeting. The decision matched the unanimous consensus of 20 economists surveyed by Rzeczpospolita and Parkiet, keeping borrowing costs steady for the seventh consecutive month after a 25 basis point reduction in March 2026. The deposit rate remains fixed at 3.25%, the lombard rate at 4.25%, the rediscount rate at 3.80%, and the discount rate at 3.85%. The decision followed a September hold that weighed second-quarter economic expansion in the eurozone against a slowdown in the United States. International monetary tightening formed the broader setting, with recent rate increases enacted by the European Central Bank, the Bank of Japan, and the US Federal Reserve.

Inflation breaches the official target band

The rate pause follows an increase in Polish consumer price inflation, which climbed to 4.0% year on year in September 2026 according to a preliminary estimate from Statistics Poland. Month-on-month consumer prices increased by 0.7%, pushing annual inflation outside the central bank's tolerance band of 2.5% plus or minus one percentage point for the first time since June 2025. Economists at Bank Pekao and Credit Agricole BP expect inflation to remain above the 3.5% threshold throughout 2027, driven by high global oil and energy prices tied to escalating Middle East tensions. The Polish government's CPN 3.0 support program, which lowers value-added tax and excise duties on motor fuels through late 2026, is estimated by analysts to reduce the headline inflation figure by approximately 0.7 percentage points.

The reason why the Monetary Policy Council will raise interest rates is that inflation is expected to remain above the NBP inflation target for a year.

Tightening expectations ahead of November projection

Financial markets and commercial bank analysts expect the central bank to begin adjusting rates upward once official forecasts are updated. Forward rate agreements on three-month WIBOR trade at 4.32% over a nine-month horizon compared to a current rate of 3.92%, pricing in at least one 25 basis point rate increase. DI Xelion chief economist Piotr Kuczyński noted that policymakers will rely on the comprehensive macroeconomic projection scheduled for release at the 4 November 2026 meeting before adjusting borrowing costs.

The MPC will wait for the inflation projection, which it will see in November. And then it will make responsible decisions.

Attention now shifts to the press conference by National Bank of Poland Governor Adam Glapiński on 8 October 2026 at 15:00, where policymakers will outline their stance on energy prices and underlying domestic price pressures.

Mortgage borrowing costs among the highest in Europe

Polish mortgage rates have climbed despite the steady policy rate, reflecting market expectations of monetary tightening over the coming six to nine months. Data compiled by Rankomat shows average fixed mortgage rates at 6.4% and variable rates at 5.7%, adding 226 PLN to monthly payments for a 30-year fixed-rate loan of 500,000 PLN compared to variable terms. According to European Central Bank figures for August 2026, Poland recorded an average new mortgage rate of 5.99%, the second-highest borrowing cost in the European Union behind Hungary at 7.16%. For a 500,000 PLN loan over 30 years, average monthly repayments in Poland total 2,995 PLN, compared to lower regional rates of 5.18% in Czechia, 4.0% in Germany, 3.2% in France, and 1.94% in Malta.