How to make git log command output properly displayed on Windows CLI terminal?
As you can see I can type diacritical characters properly but on git log the output is somehow escaped. According to UTF-8 encoding table the codes between angled brackets (< and >) from the output correspond to the previously typed git config parameters.
I have tried to set LESSCHARSET environment variable to utf-8 as sugested in one of the answers for similar issue but then the output is garbled:

I know .git/config is encoded properly with utf-8 as it's handled by gitk as expected.

Here is locale command output if necessary
LANG= LC_CTYPE="C.UTF-8" LC_NUMERIC="C.UTF-8" LC_TIME="C.UTF-8" LC_COLLATE="C.UTF-8" LC_MONETARY="C.UTF-8" LC_MESSAGES="C.UTF-8" LC_ALL= The output is the same also in pure git-bash:

so I believe the problem is shell independent and relates to Git or its configuration itself.
Okay, I experimented a bit and found out that Windows Git commands actually need UNIX variables like LC_ALL in order to display Polish (or other UTF-8 characters) correctly. Just try this command:
set LC_ALL=C.UTF-8 Then enjoy the result. Here is what happened on my console (font "Consolas", no chcp necessary):

Update:
type (display file on console) to work correctly, you do need chcp 65001.cat you profit from the aforementioned set LC_ALL=C.UTF-8.
Update 2: How to make the changes permanent
As user mono blaine said, create an environment variable LC_ALL and assign it the value C.UTF-8, either globally or for your own user profile only (sorry for the German screenshot):

Next time you open a command processor console (cmd.exe) you should see the variable value when issuing the command echo %LC_ALL%. In PowerShell you should see it when issuing $env:LC_ALL.
The simplest way to make the UTF-8 code page permanent ist to open regeedit and add a new value named Autorun of type string to section HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Command Processor and assign it the value chcp 65001.

Henceforth, this command will be executed each time you open a new cmd.exe console. You even see its output in the new window: "Aktive Codepage: 65001." (or similar in your respective language).
Oh, by the way: In order to display a UTF-8 encoded file correctly in PowerShell you can use Get-Content -encoding UTF8 file.txt or cat -encoding UTF8 file.txt (cat being an alias for Get-Content in PowerShell).
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