Poland’s December 2025 Interest Rate Decision: A Data-Driven Macro Analysis
Key takeaways: Poland’s central bank cut rates by 25 basis points to 4.00%, marking the third consecutive easing since September. Inflation pressures have eased but remain above target. Economic growth shows signs of moderation amid global uncertainty. Financial markets reacted with modest PLN depreciation and lower short-term yields. Fiscal discipline remains intact despite external shocks. Forward risks include geopolitical tensions and commodity price volatility.
Table of Contents
On December 3, 2025, Poland’s central bank announced a 25 basis point cut in the benchmark interest rate to 4.00%, in line with market expectations. This move follows a steady easing trend from 5.75% in March to 4.00% now, reflecting a shift from aggressive tightening to cautious accommodation amid evolving macroeconomic conditions.
Drivers this month
- Inflation slowed to 3.80% YoY in November, down from 4.20% in October.
- GDP growth moderated to 2.10% YoY in Q3 2025, below the 3.00% average in 2024.
- Core inflation remains sticky at 4.10%, driven by services and housing costs.
Policy pulse
The current 4.00% rate sits above the neutral estimate of 3.50%, signaling a cautious stance. The central bank balances inflation containment with growth support, aiming to anchor inflation expectations near the 2.50% target over the medium term.
Market lens
Immediate reaction: The Polish zloty (PLN) weakened 0.30% against the euro in the first hour post-announcement, while 2-year government bond yields fell by 12 basis points, reflecting eased monetary conditions and reduced rate hike risk.
Core macroeconomic indicators underpin the rate decision. Inflation, growth, labor market, and external balances provide a comprehensive view of Poland’s economic health.
Inflation trends
Headline inflation eased to 3.80% YoY in November, down from 4.20% in October and well below the 5.10% peak in early 2025. Energy prices contributed -0.40 percentage points to the monthly inflation decline, while food inflation remained stable at 6.00% YoY.
Growth and labor market
GDP growth slowed to 2.10% YoY in Q3 2025, compared to 3.00% in Q3 2024 and 2.80% in Q2 2025. Unemployment held steady at 5.20%, near historic lows, supporting consumer spending but limiting labor cost relief.
External sector
Poland’s current account deficit widened slightly to 1.80% of GDP in Q3, pressured by higher import costs amid global commodity price volatility. Exports remain resilient, growing 4.50% YoY, supported by EU demand.
Monetary policy tightening peaked in Q1 2025, followed by four rate cuts totaling 175 basis points. The central bank’s forward guidance suggests a pause or limited further easing, contingent on inflation persistence and external risks.
This chart reveals a decisive shift from restrictive to accommodative policy, reflecting improved inflation dynamics but cautious optimism on growth. The trajectory suggests a gradual return to neutral rates by mid-2026 if inflation stabilizes near target.
Market lens
Immediate reaction: PLN depreciated 0.30% vs. EUR, while 2-year yields dropped 12 bps, indicating market confidence in reduced tightening. Breakeven inflation rates fell 10 bps, signaling eased inflation expectations.
Looking ahead, Poland’s monetary policy faces a complex environment shaped by domestic and external factors.
Bullish scenario (30% probability)
- Inflation continues to fall below 3%, enabling further rate cuts to 3.50% by mid-2026.
- GDP growth rebounds to 3.50% YoY, supported by strong EU demand and fiscal stimulus.
- PLN strengthens amid stable global risk sentiment.
Base scenario (50% probability)
- Inflation stabilizes near 3.50%, with rates held steady around 4.00% through 2026.
- Growth remains moderate at 2.00–2.50%, constrained by global uncertainties.
- Fiscal policy remains prudent, with government budget deficits below 3% of GDP.
Bearish scenario (20% probability)
- Geopolitical tensions escalate, pushing commodity prices and inflation higher.
- Central bank forced to pause or reverse easing, keeping rates above 4.25%.
- PLN weakens sharply, increasing inflationary pressures via import costs.
Poland’s December 2025 interest rate cut reflects a cautious pivot toward growth support amid easing inflation. The central bank balances persistent core inflation risks with slowing economic momentum and external uncertainties. Fiscal discipline and resilient exports provide buffers, but geopolitical and commodity price shocks remain key downside risks.
Market reactions suggest confidence in the central bank’s calibrated approach, though volatility may rise if inflation deviates from expectations. Investors should monitor inflation trends, fiscal developments, and global risk sentiment closely.
Overall, Poland’s monetary policy is entering a phase of measured accommodation, with a watchful eye on inflation dynamics and external shocks shaping the path forward.
Key Markets Likely to React to Interest Rate Decision
The Polish interest rate decision typically influences currency, bond, and equity markets sensitive to monetary policy shifts. The zloty’s exchange rate, short-term government bond yields, and select stocks with domestic exposure are key barometers. Crypto markets may also react to risk sentiment changes.
- EURPLN – The primary currency pair reflects PLN strength and monetary policy expectations.
- PKN – A major Polish oil refiner sensitive to interest rates and commodity prices.
- PKO – Poland’s largest bank, impacted by rate changes and credit conditions.
- BTCUSD – Bitcoin’s price often correlates inversely with risk-off monetary policy shifts.
- USDCAD – Reflects commodity price and global risk sentiment, indirectly linked to Poland’s external environment.
Indicator vs. EURPLN Since 2020
Since 2020, Poland’s benchmark interest rate and the EURPLN exchange rate have shown a strong inverse correlation. Periods of rate hikes, such as in 2025 Q1, coincided with PLN appreciation, while easing cycles saw PLN depreciation. This dynamic underscores the central bank’s influence on currency valuation and inflation expectations.
FAQ
- What was the latest interest rate decision for Poland?
- The central bank cut the benchmark rate by 25 basis points to 4.00% on December 3, 2025.
- How does this decision compare to previous months?
- This is the third consecutive cut since September, down from 5.75% in March 2025.
- What are the main risks facing Poland’s monetary policy?
- Key risks include geopolitical tensions, commodity price volatility, and persistent core inflation.
Key Takeaway
Poland’s December rate cut signals a cautious shift toward growth support amid easing inflation, but external risks and core price pressures warrant vigilance.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The interest rate cut to 4.00% in December compares to 4.25% in November and a 12-month average of 4.85%. This marks a clear downward trend from the peak of 5.75% in March 2025.
Inflation’s downward trajectory from 5.10% in early 2025 to 3.80% in November aligns with the easing cycle. GDP growth’s moderation from 3.00% to 2.10% YoY signals cooling economic momentum.