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Inflation and interest rates. Przemysław Kwiecień from XTB comments on the conference of the President of the NBP

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I am worried that the fact that prices are rising has become a new norm for us – said the chief economist of XTB Przemysław Kwiecień in the program “Wstasz i know” on TVN24. According to the economist, “this is a phenomenon that should not be normal for us, and even more so for the central bank.” “We can’t say we’ve been successful until this happens,” he said.

– Since autumn, when the Council did not react to the inflation path, which was higher than it was before, and, moreover, to its projection, which showed that the inflation target would not be achieved in the horizon of this projection, i.e. until 2024, 2025, it became clear that that the Council will no longer raise interest rates. After the first meeting it might have seemed: “maybe even in November”. When that didn’t happen, it became clear that this was the end of the cycle interest rate increases April said. According to the economist, “really, very bad news from the inflation front would have to come for the Council to change its mind.”

“I expect interest rates to stay where they are for most of the year. Perhaps even in the autumn they will start to be lowered, if the trend in the global energy markets is favourable. Just some normalization energy prices in Europe from very high levels last autumn has resulted in what we have in Poland. Inflation is still very high, of course, but slightly lower in December, he assessed. The economist explained that this positive surprise is due “precisely to the fact that gas and coal energy prices are falling”.

Economist: Rising prices have become the new normal for us

Przemysław Kwiecień noted, however, that “he would be very happy if this inflation was within the target or fluctuating around the target, i.e. 2.5 percent. plus, minus one percentage point.” – – This would mean price stability, we could expect everything to cost more or less the same as last time – he said. He emphasized that “we are very far from that point”.

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“What worries me is that rising prices have become the new normal for us. There is a long way to go back to what we enjoyed in recent years, that we thought it was not normal that something was getting more expensive, he said. According to the economist, “this is a phenomenon that should not be normal for us, and even more so for the central bank.” “We can’t say we’ve been successful until this happens,” he said. He pointed out that although the rate of inflation is falling, prices are still rising. “Growth is a bit slower, but still far too fast,” he said.

Przemysław Kwiecień also referred to the method of communication conducted by the President of NBP, Adam Glapiński. – I value my time, so I would like these conferences to be as short as possible. From the central bank’s point of view, the message should be simple: there is an inflation projection, we can explain why it is the way it is and not otherwise, explain what we want to do with it to get to the inflation target. This would be the end of any central bank conference, be it the NBP, the ECB or the Fed, he said.

Read more: Glapiński: we are reaching the top of the peak, we expect a radical decrease in inflation>>>

Interest rates and inflation in Poland

The Monetary Policy Council during its January meeting did not change interest rates. This decision was expected by most economists. The main NBP rate, the reference rate, remained at 6.75%.

Read also: “The average Pole loses PLN 260 a month. Inflation eats it out of his salary”

According to data from the Central Statistical Office, inflation in Poland in December 2022 amounted to 16.6 percent. Compared to the previous month, prices increased by 0.2 percent. From the preliminary data from the Central Statistical Office Food and non-alcoholic beverages rose 21.5% in 2018. Every year. Prices of energy carriers went up by 31.2%, and fuel prices to private means of transport increased by 13.5 percent.

Inflation in PolandPAP/Maciej Zielinski

Main photo source: Jerzy Ochoński/PAP

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