The Monetary Policy Council did not change interest rates and the main rate is still 5.75%. This is no surprise, no one expected a different decision. However, the president of the NBP and also the chairman of the Monetary Policy Council may surprise. Adam Glapiński during the last press conference he dashed hopes for rate cuts this year. But a little has changed since then. We received better than expected data on inflation – its main measure was 4.7 percent in December. (5% was initially expected), and the core inflation, which the Monetary Policy Council closely monitors (because the Council's moves have an impact on it), dropped to 4.0%. with 4.3 percent in November. What is Adam Glapiński saying today? We reported live below:
The President of the National Bank of Poland on inflation
The President of the NBP started with a request related to the upcoming presidential elections. – I would like to ask you not to involve the NBP in the ongoing election campaign – he said. – We are independent bank central bank, including a politically independent central bank, he added.
In December, inflation was almost twice the inflation target. In the coming months it will probably increase further and be above 5 percent. Inflation is driven up by rising energy prices and other regulatory and tax decisions. […] In addition, there is a high dynamics of prices of market services. Equally important, forecasts indicate that inflation in the coming quarters will not decline towards the NBP inflation target. This is largely due to the solutions regarding energy prices recently adopted by Parliament
– said President Glapiński. As he emphasized, “at the end of the year, inflation may be almost the same as currently, maybe 0.1-0.2 percentage points lower.” He blames this primarily on energy prices, which he devoted a lot of time to, suggesting that regulatory and government decisions (partial unfreezing) are responsible for their increase.
What about interest rates?
We must postpone discussions about possible interest rate cuts for some time. This is a change in the situation, because two months ago it seemed that inflation would reach its peak at the beginning of 2025 and then systematically decline.
– continues the president of the National Bank of Poland. He recalled that then the Monetary Policy Council suggested that talks on possible rate cuts could start in March.
Adam Glapiński drew attention to consumers' inflation expectations, which may also increase the inflation rate. He also mentioned the double-digit wage growth, low unemployment and the expected acceleration of economic growth – the situation in the Polish economy is good, but at the same time it has a pro-inflation effect.
The President of the NBP also said that the bank is closely monitoring the significantly increased core inflation (i.e. without prices food and energy), which is higher than in the middle of last year. According to the current forecasts he cited, it is also expected to remain at an increased level of around 4% this year.
– However, we do not prejudge in any way what decisions we will make in the coming quarters – emphasized Glapiński. – A lot can change, both at home and abroad. We will make decisions depending on the incoming data.
The zloty exchange rate under the microscope
– I assure you that the members of the Monetary Policy Council are ready to reduce rates as quickly as possible – continued the president, responding to question journalists. In turn, when asked whether the current zloty exchange rate is favorable for the Polish economy, he replied:
The current course for the economy is acceptable. The high exchange rate of the zloty is, of course, positive for the NBP and the Monetary Policy Council due to the fact that it has an anti-inflation effect, but let's not exaggerate, it has a small impact. We also conduct surveys among entrepreneurs, and when it comes to how much they are bothered by the high exchange rate today, it is very high. They are worried about the lack of demand, they are worried about economic stagnation in Germany, because it is our main partner. These are their problems. They are worried about rising wages and a tight labor market.
– First of all, the zloty is stable, it is a stable currency – he emphasized.