A scenario may emerge in which the Monetary Policy Council (MPC) raises interest rates once more by 25 bp or twice by 25 bp, but it cannot be ruled out that for now the Council will finish raising interest rates, informed the President of the National Bank of Poland ( NBP) and the chairman of the MPC Adam Glapiński.
“Probably, as I said publicly, a scenario in which we raise interest rates again by 25 bp or twice by 25 bp may emerge from the MPC discussion. However, it cannot be ruled out that we will end interest rate hikes for now, but at the same time, we do not tie our hands together and we do not announce the end of the increase cycle. We act in a pragmatic manner, “Glapiński said in an interview for Business Insider.
“The mere hike by 25 bp would already be a signal that we are inhibiting the rate hikes cycle, but we are still looking at the situation and we are not sure when we will say: time is at the end of the cycle. Especially that in January next year we expect inflation to be at an elevated level again. At the same time, we do not know what the government will do with regard to protective measures, what the ERO tariffs will look like,” he added.
The head of the central bank emphasized that even if inflation at the beginning of next year is again at a higher level due to regulated prices, it will not change the nature of price processes.
“The situation would be clear for me and the MPC if the summer inflation stopped and then started to decline. In this situation we would not raise interest rates any further. I assume, however, that we will not have such a comfortable situation. We decide to make a small hike in September and we announce a break in the cycle, but we do not declare its end. It is also possible that the MPC will not do anything with rates in September, but will not declare the end of the rate hikes,” Glapiński pointed out.
“From my point of view, I would very much like this scenario to materialize and I believe it will: in September there is one more small hike in interest rates, or we are doing nothing anymore, and then we watch the inflation rate gradually decline in the following months. However, I think that in the last quarter of next year it will be possible to cut interest rates,” summed up the president of the NBP.
The MPC started to raise interest rates in October 2021 and made them monthly. After the July hike by 50 bp, the main reference rate is 6.5%.
Source: Business Insider and ISBnews
