Inflation in Poland. Interest rates – Witold Orłowski and Małgorzata Starczewska-Krzysztoszek warn against another rate cut by the Monetary Policy Council

During the September meeting, the Monetary Policy Council decided to lower it NBP interest rates by 75 basis points. The reference rate decreased from 6.75%. up to 6.00 percent The MPC’s decision surprised economists of the largest banks in Poland. Most of them expected a reduction in interest rates in September, but on a smaller scale – by 25 basis points. This is the first interest rate cut since May 2020.

According to data from the Central Statistical Office in August 2023 it was 10.1%. Every year. According to the Central Statistical Office data, inflation we will wait longer in September. Preliminary data for this month will be published on September 29. During last week’s press conference, NBP President Adam Glapiński announced that inflation for September will probably be slightly above 8.5%.

According to prof. Witold Orłowski’s announcement of President Glapiński about single-digit inflation for September will probably come true. He also drew attention to the situation on the fuel market in Poland.

– Maybe the president also has an intuition that tells him that for some reason Orlen will reduce prices in the next four weeks. gasoline pricesand not increase it – Orłowski pointed out, adding that “it directly affects inflation”.

– The decline in inflation that we have had recently was mainly due to falling fuel prices – emphasized the guest of “Fakty po Faktach”.

Dr. Małgorzata Starczewska-Krzysztoszek, an economist from the University of Warsaw, pointed out that “if we look at oil prices on world markets, in June the price was USD 73 per barrel, today it is USD 93.”

– Twenty dollars more. In addition, we have something that has intensified after the decision of the Monetary Policy Council lowering the NBP reference rate, i.e. the weakening of the zloty, which means we pay more for each dollar. We have two sources that should increase fuel prices at gas stations, and we have reductions, so we absolutely have a political decision – she commented.

Economists admitted that they considered the possibility of reducing interest rates also in October, although they warned against the consequences of such a possible decision by the Monetary Policy Council. According to the current schedule, the Council meeting will be held on October 3-4.

– Of course, the negative situation for the Polish zloty will deepen on the currency market. He will be even weaker, but you can still survive – said Starczewska-Krzysztoszek.

In her opinion, the “decrease in the credibility of the Polish economy” will be more serious. – This will be a total loss of credibility not only of the central bank and the president of the central bank, but it will also be a decline in the credibility of the Polish economy and it will not be easy to make up for it – she emphasized.

Witold Orłowski also drew attention to the impact of a possible further reduction in interest rates on slowing down the decline in inflation. – The effect of all this will probably be that sometime in November or December, inflation will stop decreasing. I think it will be at the level of 8-9 percent (year to year) and such inflation, unfortunately, may – given the decline in the central bank’s credibility – last for years – he pointed out.

Małgorzata Starczewska-Krzysztoszek echoed that this will also happen due to the weakening of the zloty, because “everything we import will be more expensive.” – Because gasoline will probably start to grow again after October 15 – added Orłowski.