WOOD Flash – Poland macro: budget, politics and rates outlook

We are entering the intense legislative period for the budget. The government’s proposed 2026 budget plan roughly matches our expectations of continued large deficits, which underpins our view that the 10-year sovereign bond yield will rise next year and the scope for monetary easing by the NBP is contained to one more 25bps reduction.
The coming weeks are likely to see conflicting newsflow. The political landscape is highly polarised and the beginning of a new presidential term may have just ignited what feels like a long election campaign, ahead of the scheduled 2027 general elections. The president has already vetoed six pieces of legislation and can complicate, but not block, the budget process. Fundamentally, we remain of the view that Poland’s fiscal position is robust, but a worsening of the sovereign credit outlook is plausible in the coming year, as the 2027E budget is unlikely to see any consolidation at all, again.