Bank of America now expects another 25 bp cut to 3.75% by spring 2026.

Against the backdrop of falling inflation and decreasing policy uncertainty, the latest report from Bank of America has revised its assessment of the Polish National Bank's (NBP) future easing space. The bank now expects the NBP to further lower the policy rate by 25 basis points in the spring of 2026, bringing the benchmark rate to 3.75%.

January Meeting May "Wait and See," Market Only Bets on Small Rate Cut

Mai Doan, an economist at Bank of America, noted in the report that although market pricing already reflects an "implied rate cut" of approximately 11 basis points at this meeting, the baseline scenario remains that the NBP is likely to keep the interest rate unchanged at **4.00%** for the interest rate decision on January 14, providing more clues about future actions through its wording.

Cooling Inflation Provides Greater "Exploratory Space"

One of the key bases for adjusting the report is the continued decline in Polish inflation. The data shows that overall inflation in Poland fell to 2.4% year-on-year in December 2025, below the level of widespread market expectations, making a "gradual easing" policy environment smoother.

From the central bank's framework, the NBP's inflation target is 2.5% plus or minus 1 percentage point. Following a previous rate cut, the NBP governor also signaled a possible "observation period," emphasizing that the next step is likely to be incremental adjustments driven by data rather than a series of large actions.

Current Interest Rates and Next Steps: Timing More Critical than Magnitude

After the December meeting last year, the NBP set the reference interest rate at 4.00% (while also lowering other policy rates), setting the stage for this year's first meeting.

For the market, the focus is not just on a straightforward "no action," but whether the policy committee will hint that the next actual rate cut is more likely to fall in the spring, under the premise of relatively stable inflation trends and expectations, thereby aligning with Bank of America's prediction of "another rate cut within the year."