Poland’s Monetary Policy Council has voted to maintain the interest rate at 4%. This is a welcome decision, an indicator that the nation’s hard economic work is beginning to manifest itself in real progress. The central bank’s recently announced decision, which was highly anticipated, is to maintain the key policy rate at 4% y-o-y. This decision coincides with broader economic trends across Central and Eastern Europe, where various countries are grappling with inflation and growth projections.
In other monetary news from around the world, the Czech Republic’s central bank has declared a terminal interest rate of 3.5%. However, the entire region still watches inflation with a hawkish eye as central bankers cry wolf about present fears of a new normal. Indeed, Czechia’s central banker, Alena Zamrazilova, emphasized that the inflation structure remains “relatively unfavorable.” This underscores the broader economic reality of pursuing any long run goal like price stability.
Regional Economic Indicators
Romania meanwhile is celebrating a falling inflation, slowing to 9.7% y-o-y in December. This is encouraging news for policymakers hoping to bounce back from the recession and stabilize the economy. Romania is expected to release its industrial output figures for November on a scheduled basis at 8:30 AM CET, while Czechia will announce its retail sales growth for the same month at 9 AM CET. These indicators are important for understanding where the economy is today and where it’s headed so monetary policymakers can act preemptively.
The Polish central bank is set to hold a press conference at 3 PM CET, where officials may address the implications of maintaining interest rates and provide insights into future monetary policy directions. This unprecedented event will be watched closely by economists and market analysts together for this singular talent.
Global Economic Outlook
UNCTAD’s global growth projections indicate a slight improvement in prospects in the coming year. Continuing this trend, preliminary estimates from the state agency project continuing growth of 2.6% in 2026 and 2.7% in 2027. January’s forecasts represent a significant upward revision from the projections made last June. This change reflects a more upbeat view of the pace of the global economic recovery. The average growth rate for this decade will be the lowest since the 1960s. This reality leaves us with some disturbing questions about our capacity to sustain extraordinary economic momentum.
In Hungary, central banker Gyorgy Kurali has recently tried to manage expectations on interest rate cuts. First cut in second quarter 2026. That’s contingent on us not being caught off guard by any surprise inflationary shocks. Look for a 25 bp cut by March 2026. This will depend on new inflation and growth forecasts matching up with previously published expectations from the National Bank of Poland (NBP).
As regional economies continue to adapt to these changes, policymakers continue to work on managing growth and inflation through careful balancing of forces. The central banks of Poland, the Czech Republic and Romania will soon be making far-reaching decisions. These decisions will have a profound impact on the future economic direction of the entire Central and Eastern Europe.