Poland holds key rate at 3.75% while lifting next year's inflation outlook

What the central bank did and why it matters

Poland's Monetary Policy Council left rates parked at 3.75% again, sticking with a sit-tight approach. Of 33 economists surveyed by Bloomberg, all but four had predicted no move.

Alongside the hold, the bank marked up its inflation path for next year to 3.1%-5.3% from 1.5%-4% in July. Bank Pekao SA called the new projection hawkish in tone, but said the council is waiting to see if the government keeps fuel-price caps.

Prices, risks and the policy backdrop

Officials flagged two key upside risks to prices: Middle East tensions and loose domestic fiscal policy. Governor Adam Glapinski has said the 10-member panel stands ready to hike if needed, and so far has not seen evidence that dearer fuel is rippling through the broader economy.

September saw inflation reach 4.1%, the highest level of 2026, before slipping to 3.5% in October following the government's restart of fuel-price caps. Led by Marcin Mazurek, mBank SA's analysts said the projection indicates the MPC is showing a notably high tolerance for inflation, and they had penciled in a 25 basis point hike this week.

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Markets and the zloty

The decision followed a European Central Bank rate increase and strain on the zloty, which had fallen to a three-year trough versus the euro during a political crisis. On Wednesday, the currency strengthened 0.4% versus the euro as emerging-market peers rallied after the US midterm elections. Poland's two-year local-currency yield declined by 11 basis points to 4.83%, its weakest level since Oct. 23.

What comes next and the politics

Credit Agricole Bank Polska SA's Krystian Jaworski said, "The November projections support our view that interest rates will be raised by 25 basis points in January." ING Bank Slaski SA's Rafal Benecki still sees 50 basis points of hikes in the first quarter of 2027, though he and colleagues noted that a continued slide in energy prices would weaken the case for tightening.

Politics are now a live factor. Glapinski faces a parliamentary vote that could suspend him, after Prime Minister Donald Tusk and his majority accused him of political interference ahead of the 2023 election. He rejects the allegations and the probe as baseless, adding that the MPC and the central bank cannot carry out their mandate without him. He is due to hold his monthly news conference in Warsaw at 3 p.m. on Thursday.

The bottom line for your portfolio

The council is choosing patience even as it lifts its inflation track and highlights clear risks, a mix that nudged short-end yields lower and kept the policy path contested. If you hold Polish assets, watch fuel-price caps, Glapinski's Thursday remarks, and the zloty - each is shaping rate expectations and pricing.

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