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Inflation in 2023 – how will prices go up next year? Maria Drozdowicz-Bięć comments

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It is very difficult to estimate what inflation will be next year. If I wanted to be optimistic, I’d say inflation would go up to 15 percent. I do not think that it would break 20 percent in 2023, because it would mean a very quick start of the inflation spiral – said Maria Drozdowicz-Bięć professor of the Warsaw School of Economics from the Investments and Economic Cycles Bureau on TVN24.

The expert explained that the height inflation next year will depend “on the conditions of our monetary and fiscal policy as well as external conditions, ie prices in international markets”. How prices of goods and services will rise “is very difficult to estimate,” she added.

Lifting feet “one of the most important tools”

– We have these external factors that are related to war in Ukraine and commodity prices and factors mainly on the side of fiscal policy. If the government keeps pouring money into the market, which it keeps promising its potential voters all the time, this spiral will unfortunately stretch and this inflationary pressure will last longer, she said.

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She added that “this means that what is now pro-inflationary, ie increased demand, will be released in six months, in a year, depending on how long these supposed ‘shields’ will work”.

According to the expert, “it cannot be said” that raising interest rates does not do much. – It is one of the most important tools that central banks have at their disposal. They have a much wider range of tools, but our bank lost some of these tools and it lost it for many years. I mean soft monetary policy in the form of announcements made, announcements of how the monetary policy will be conducted. Here the bank (central – ed.) Has completely compromised itself – said Drozdowicz-Bięć.

Then she added, “He was trying to charm reality.” These statements of the president of the NBP (Adam Glapiński – ed.) From a year ago, where he denied the inflationary pressure and said that nothing like this would happen, that we are even in danger of deflation, meant that the markets, all participants – both entrepreneurs and banks, and consumers – they lost confidence in the statements of the NBP president and the statements of the members of the Monetary Policy Council.

The economist explained that another “non-soft, heavier tool” is selling or buying treasury bonds“- Not directly from the government, but through the bank. And this is a way to limit or increase the money supply,” she said.

Also read: Bad news for borrowers. WIBOR 6M broke another border

Inflation and interest rates rise

From the introductory ones data of the Central Statistical Office shows that the prices of consumer goods and services in May 2022 increased by 13.9 percent. year on year, and compared to the previous month they increased by 1.7%.

Inflation in Poland is the highest in the 21st century, and at the same time the cycle continues interest rate increases. The Monetary Policy Council (MPC) raised interest rates by 75 basis points on Wednesday. This is the ninth consecutive interest rate hike. The main benchmark interest rate rose to 6.0 percent. This is the highest level since June 2008.

Interest rates and inflation in PolandPAP / Maciej Zieliński

Main photo source: Red_Baron / Shutterstock

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