The cycle of interest rate hikes is not over, according to Monetary Policy Council (MPC) member Ludwik Kotecki. According to him, it is also “much too early” to declare interest rate cuts at the end of this year.
“We certainly cannot say today that the cycle of interest rate hikes is over, because that would be much too early. Not to mention that some members said quite recently that they foresee cuts at the end of this year. It seems much too early for such statements. It needs to be watched. I expect that if the [Polish] economy does very well with the recession in the world in the EU, in some countries, or with a very strong slowdown; if Poland does well with that, then […] very well, of course, but that also means that inflation and its upward pressure on prices will continue and perhaps some decisions will be needed. It’s not necessarily about rates, but I come back here to the idea of savings bonds issued by the NBP,” Kotecki told Tok FM radio.
The Council member estimates that there will be a peak in inflation in February due to the lifting of the current anti-inflationary shield to 20.2% y/y, but there could also be a CPI level of around 19%.
He pointed out that core inflation probably rose to 11.6-11.7% y/y in December from 11.4% in November.
“This can be seen in the EC’s forecast that Poland will remain this year, 2023, with the highest inflation in Europe, perhaps Hungary will accompany us. This is due to the fact that it has not been possible so far – and this is evident in core inflation – to reduce inflationary pressures and price increases generated in the Polish economy,” Kotecki assessed.
“For the time being, our decisions have very little or actually no impact at all, because, as I said – core inflation continues to grow for us,” the Council member concluded.
The MPC kept its benchmark rate at 6.75% in January. It had previously raised interest rates from October 2021. (from 0.1%) until September 2022.
According to the Polish Central Statistical Office (GUS), consumer inflation was 16.6% on an annualized basis in December 2022, according to a quick estimate of the data. Compared to the previous month, consumer prices rose 0.2%.
Source: Tok FM radio and ISBnews
