In early July, interest rates increased for the tenth time in a row, and a few days later, the National Bank of Poland published its inflation forecasts. – If the projection materializes and, according to today’s assessment, it can be said that it will be possible to quickly end the monetary policy tightening cycle – said the President of the NBP, Adam Glapiński in the reply sent to the Polish Press Agency. The head of the central bank also referred to the question of when the inflation peak will be.
The Monetary Policy Council (MPC) raised interest rates by 50 basis points during its July meeting. The main benchmark interest rate rose to 6.50 percent. This is the highest level since August 2004. The next decision-making meeting of the MPC will be held on September 7. According to the current schedule, the meeting scheduled for August 23 will be non-decision.
The president of the NBP, Adam Glapiński, who is also the chairman of the MPC, was asked by PAP about which one interest rate increases can be expected at the September meeting. – If the projection materializes and, according to today’s assessment, it can be said that it will be possible to end the monetary policy tightening cycle soon – replied the head of the central bank.
According to Glapiński, in 2023, with the rapidly declining GDP growth rate, rate cuts will be possible. – Further decisions, however, will depend on the incoming information on the outlook inflation and economic activity – stated the President of the National Bank of Poland.
Inflation in Poland
The central path of the NBP projection assumes that CPI inflation in Poland in 2022 will amount to 14.2%, in 2023 it will be at the level of 12.3%, and in 2024 it will amount to 4.1%. The July projection of the NBP shows that the peak of inflation will fall in the first quarter of 2023. Meanwhile, during the Friday press conference, the president of the National Bank of Poland, Adam Glapiński, said that the peak of inflation would most likely occur in summer, and then we would “slowly go down”.
Adam Glapiński was asked by PAP about the discrepancy in forecasts. – We will have a peak in inflation in the third quarter of this year and it will be around 16 percent, assuming the government’s anti-inflation shield is maintained. On the other hand, the published path of the central projection assumes that the shield will be valid until October, informed the head of the central bank. Glapiński explained that before “the work on the projection was completed, there were no clear declarations on the extension of the shield, which are now confirmed by government representatives”.
On Tuesday, government spokesman Piotr Mueller announced on Polish Radio 24 that the anti-inflationary shield “probably” would be extended even more. “We have extended the anti-inflationary shield until the end of October and we will probably extend it further, as we see that these anti-inflation measures are effective to the extent that they hedge against even higher prices,” Mueller said.
In the opinion of the central bank governor, assuming the maintenance of the government anti-inflation shield over the projection horizon, “CPI (consumer – red) inflation will gradually decline starting from the third quarter of this year”. “In the fourth quarter of 2023, inflation will then reach 5.5 percent, and in the fourth quarter of 2024 – 3.5 percent.” – added the head of the NBP. He noted that these results depend “on the materialization of the assumptions adopted in the projection, including the method and dates of withdrawing individual solutions of the shield”.
Main photo source: PAP / Radek Pietruszka