mBank Sees Euro at $1.16–$1.18 and Polish Interest Rates Rising to 4.25%

mBank expects the euro to strengthen to $1.16–$1.18 over the medium term and Polish interest rates to rise by 0.5 percentage points in the first quarter of 2027. The bank’s economists say higher rates should support the zloty, while forecasting slower economic growth and inflation above 4% early next year.

By Editorial Team

Rate rises could support an undervalued zloty

In an analysis dated 13 November, mBank’s economists describe the zloty as slightly undervalued relative to Poland’s economic fundamentals. They point to fiscal risk, institutional disputes and the relatively dovish stance of Poland’s Monetary Policy Council (RPP), compared with other central banks, as factors weighing on the currency. Actual rate increases should help stabilise it, they argue.

Interest-rate differences between economies matter because higher rates can make investments denominated in a currency more attractive. They do not determine exchange rates on their own, however: investors also consider risk and the economic outlook.

A stronger euro does not guarantee a cheaper dollar in Poland

mBank expects EUR/USD to return to around 1.16–1.18 over the medium term, implying a stronger euro against the US dollar. This is not a direct forecast of the dollar’s price in zlotys.

The USD/PLN exchange rate depends on both the euro-dollar and euro-zloty exchange rates. If EUR/PLN remained unchanged, a rise in EUR/USD would make the dollar cheaper in Poland. A weaker zloty against the euro could limit that effect.

Poland’s reference rate could reach 4.25%

The bank has dropped its expectation of a November rate increase. Its forecast for a 0.5-percentage-point rise in early 2027 would take Poland’s reference rate from 3.75% to 4.25%.

For borrowers with variable-rate loans, that would put upward pressure on repayments. The timing and size of any change would depend on the benchmark specified in the loan agreement and its interest-rate reset schedule.

GDP forecasts raised, but growth set to slow

mBank has raised its GDP growth forecasts to 3.9% for 2026 and 3% for 2027. It attributes the expected slowdown next year to weaker growth in investment and consumption.

Inflation is forecast to exceed 4% year on year in the first quarter of 2027. The economists expect it to return to the tolerance band around the inflation target of Narodowy Bank Polski (NBP), Poland’s central bank, towards the end of next year.

Forecast source: mBank, “Interest Rate and Currency Forecasts (with Commentary)”, 13 November 2026. Polish original published on 14 November 2026 at 14:54 UTC.