The last time interest rates fell in Poland was at the beginning of October 2023, just before the parliamentary elections. After the change of government, there is no longer a majority in the Monetary Policy Board headed by Adam Glabinski to make further interest rate cuts. Even with a further decline in inflation, which, after its previous rise, was the main argument for increasing interest rates.
Monetary Policy Committee member Cezary Kochalski spoke about this matter. He said this in an interview with ISBnews The most likely scenario for monetary policy remains no change in interest rates until the end of this year. like March 2025 has been mentioned as a possible moment to begin discussions on cuts. The TNB will then provide inflation forecasts, which will indicate a “permanent taming of core inflation.”
According to Cezary Kochalski, it cannot be ruled out that interest rate cuts will be discussed early, at the end of this year.
Today it is difficult to determine the size of possible interest rate cuts from March 2025. Cezary Kochalski declared that we have to be fully convinced that initiating a possible series of decisions to lower interest rates will serve to achieve the goals of the National Bank of Japan in accordance with “monetary policy assumptions.”
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He indicated that he expects more than 3% this year. Increase in domestic product. – While with the recent changes in interest rates, in September, we were not yet sure that a recession would occur – and we were ultimately not sure of it – we now assume decent growth, with inflation targeted in just a few quarters and with core inflation remaining high To some extent. Inflation – explained.
Interest rate cuts. There is a condition
The implementation of interest rate cuts this year, which was assessed as unlikely, could take place – according to a member of the Monetary Policy Committee – in the event of a decline in the economic situation.. What is meant by this term?
– If it turns out that due to the abolition of protective measures, consumption is decreasing, households will have less money at their disposal, purchasing power will decrease, and if there is any significant deterioration in the economic situation in the country, we can discuss the possibility of lowering interest rates – said Cezary Kochalski .
According to him, one more An argument for discussing interest rate cuts at the end of the year could be the deteriorating profitability of currently slightly weaker companies.
There is also a clear signal to borrowers that their repayments are unlikely to increase. According to Cezary Kochalski, the option of interest rate increases is excluded in light of the available data.
What about prices and inflation?
The council member expects this Consumer inflation will not reach a maximum level exceeding 8%. It was estimated when all anti-inflation shields were withdrawnBut it may be slightly higher at the end of the year than the March central inflation path assumes. He talks about inflation of 3.4%.
— The impact of the introduction of a 5 percent VAT on food from April 1 will not be immediate, but may increase the course of inflation. Without knowing the energy-related decisions, I do not assume that we will reach the maximum level of CPI inflation at the end of the year – concluded Cezary Kochalski.
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