The March projection of the National Bank of Poland (NBP) overestimates the GDP growth rate, but also underestimates the risk of inflation. Assuming that the anti-inflation shield will be maintained until the end of the year, inflation will significantly exceed 9% this year, believes Ludwik Kotecki, member of the Monetary Policy Council (MPC). The NBP estimated that if the shield is maintained until the end of this year. inflation this year will amount to 9.1% y / y.
“In my opinion, the projection overestimates the GDP growth rate – although I would very much like the NBP analysts to be right – but it also underestimates the threat of inflation. Assuming that the anti-inflationary shield will be maintained until the end of the year, in my opinion inflation will significantly exceed this year 9 %,” said Kotecki in an interview with Rzeczpospolita.
Earlier this month, during the presentation of the March inflation projection, Jacek Kotłowski, deputy director of the NBP’s Economic Analysis Department, said that if the anti-inflationary shield was extended until the end of this year, the average annual inflation would be 9.1%.
Kotecki pointed out that such high inflation is not only the result of rising commodity prices.
“We have a significant domestic component of inflation and it is precisely this that should be fought. From this perspective, the interest rate hikes in Poland started – in my opinion – too late. And the later the tightening of monetary policy started, the stronger it must be. and we will have an additional expansionary fiscal policy,” he also said.
In his opinion, at the April meeting of the MPC there will certainly be talk of another interest rate hike, and the March meeting of the MPC was exceptional in this respect, it took place several days after the outbreak of the war in Ukraine, when little was known about its effects.
“It spoke for some caution, but on the other hand, financial market participants expected that the MPC would decide to make a big change. I hope that this uncertainty will gradually decrease. When we meet in April, we will know a bit more. And then it will be. a place for a discussion on the scale of the increase, because in my opinion there is no doubt about the increase,” Kotecki said.
According to the central path of the March NBP projection, consumer inflation will amount to 10.8% in 2022, and its peak is expected at 12.1% in 2018 Q3. GDP growth will reach 4.4% this year, before slowing to 3% in 2023 and 2.7% in 2024.
Earlier in March, the Monetary Policy Council raised interest rates by 75 bp – to 3.50% for the main reference rate. It was the sixth rate hike in a row.
Source: National Bank of Poland and ISBnews
