Economist: Trump's victory could affect Polish borrowers

Donald Trump has won the election and will become the 47th president of the United States, CNN reported. According to projections from the American station, the Republican candidate has secured enough support to ensure he receives the necessary number of electoral votes.

"Trump's victory means that the pace of interest rate cuts by the Federal Reserve next year could be slower. The Federal Reserve will likely still go ahead with the expected 0.25 percentage point cut this week, as planned, Arak said.

"However, subsequent decisions will likely depend on what the Fed expects from the new president's decisions and how it anticipates possible changes in U.S. fiscal policy. Trump has mentioned large tax cuts, which could keep inflation in the U.S. at a high level. As a result, the Fed may slow down the rate of cuts," he added.

The economist pointed out that a potentially slower pace of monetary policy easing in the U.S. will also affect decisions by Poland's Monetary Policy Council (RPP). This would mean that loan repayments in Polish złoty would fall more slowly.

"If the U.S. central bank cuts rates more slowly, the National Bank of Poland may do the same. ... The market expected the first rate cut in Poland between the end of the first and beginning of the second quarter of 2025. However, the new inflation projection in Poland and the market environment, including the Fed's decisions, will be key factors that the RPP will consider," Arak explained.

"The Council may decide that the cuts will be smaller than previously expected. It could be less than one percentage point for the entire year of 2025," he added.

The chief economist of Velo Bank noted that the potential victory of Donald Trump in the U.S. presidential election had already been priced in by the market in recent weeks.

"The market had already priced in the possibility of Trump's victory in recent weeks, as the likelihood of his win in the so-called swing states, the states that were uncertain in their vote, was growing. This was reflected in the exchange rate of the złoty to the dollar, the forint, and other currencies in our region, as well as the Mexican peso – we saw them weaken. Today, this currency basket has weakened further," Arak said.

"The złoty surpassed the level of 4.05 against the dollar, and the levels for the euro are around 4.37-4.38. This is something we could have expected – a drop in emerging market currencies caused by geopolitical uncertainty. Trump means additional tariffs and uncertainty regarding the applicability of Article 5 of the NATO treaty, which many investors on the capital markets are betting on at the moment, he added.

According to Arak, Trump's victory may increase the risks to Poland's economic growth.

"There are more risks regarding economic growth, both for the European and American economies, and consequently for Poland. However, we need to wait for specific political decisions. Previously, the impact of potential tariff decisions on trade was estimated, but there are still many questions—when will this come into effect, and how will it affect potential economic growth," the economist explained.

He pointed out that the assumptions regarding Poland's GDP growth in 2025, estimated at over 4%, may prove to be overly optimistic.

"The problem is that Poland has relatively weak foundations for economic growth this year, mainly based on services. We still lack investments, and interest rates are not helping. There are also not many public investments due to the transitional period between one and the next EU financial perspective. This is a moment when the fairly optimistic assumptions about Poland's GDP growth exceeding 4% in 2025 may need to be revised. This doesn’t mean that the Polish economy will enter a period of stagnation, but it could potentially face additional problems," the economist said.

"We will, however, learn everything from the economic plan of the new U.S. president. The election campaign is over, and what will matter is who will be part of his administration and who will hold key decision-making positions," he added.