Poland's Kotecki Sees Stable Interest Rates Amid Geopolitical Risks

Key facts

• Poland's central bank is expected to maintain stable interest rates for an extended period.
• Geopolitical risks, including the US-Iran peace deal, are seen as factors influencing rate stability.
• The central bank paused its rate-cutting cycle in March 2025 due to rising energy prices.
• One policymaker, Ludwik Kotecki, anticipates rate cuts concluding in early 2026.
• The benchmark rate was 4.25% in November 2025, following 150 basis points of cuts since May 2025.

Ludwik Kotecki, a member of Poland's Monetary Policy Council, stated that the country's central bank is likely to maintain stable interest rates for a prolonged period. This outlook persists even as geopolitical tensions, such as the US and Iran pursuing a peace deal, are expected to continue. Kotecki indicated that while the resolution of the 15-week conflict could benefit price stability, it is premature to anticipate imminent rate reductions.

The National Bank of Poland paused its cycle of interest rate cuts in March 2025, a decision influenced by a sharp increase in energy prices attributed to the conflict involving Iran. This pause came despite a surprisingly soft inflation reading of 4.9% in February 2025, which fell below economists' forecasts.

Earlier projections from Kotecki, considered one of the more dovish members of the 10-person Monetary Policy Council, suggested that the series of rate cuts would conclude in early 2026, with the benchmark rate settling around 3.75%. Since May 2025, the council has reduced rates by a cumulative 150 basis points, bringing the base rate to 4.25% by November 2025, its lowest level in three and a half years. Kotecki and fellow policymaker Henryk Wnorowski had previously indicated a potential openness to a rate cut around mid-2025, presenting a challenge to Governor Adam Glapinski's intention to keep rates unchanged.