(Bloomberg) -- Poland can’t rule out a discussion on the monetary policy adjustment before 2026 if there’s certainty about a permanent decline of inflation toward the central bank’s target, according to the National Bank of Poland Governor Adam Glapinski.
The comments to the PAP newswire come after Glapinski’s statement last month that the country’s Monetary Policy Council which he also heads is unlikely to deliver a cut before 2026, citing uncertainty about inflation forecasts. All the rate-setting panel’s decisions will depend on incoming data, he added. The zloty weakened 0.3% to 4.2809 against the euro.
Even as Hungary and the Czech Republic cut their rates this year, Poland’s central bank has kept its base rate at 5.75% since October with inflation accelerating to 4.2% in July from 2.6% a month earlier after the government raised the cap on energy prices. The hawkish policy added to Glapinski’s feud with Prime Minister Donald Tusk, who accused him of holding back economic growth.
The Monetary Policy Council’s decisions will depend on wage growth, consumption, the economic situation of Poland’s trading partners as well as energy prices, Glapinski told PAP.
“Depending on a combination of these factors, room for rate cuts may appear sooner or later,” he said. “It can’t be ruled out that the economic situation will develop in such a way that discussion about adjustment of monetary policy could be justified before 2026.”
Glapinski said that the risk of high inflation returning across Europe and the US is slowly disappearing and that expectations of rate cuts have increased. Although Poland’s economy has grown more than expected in the second quarter, it’s “still too early to say” whether that trend will continue, said Glapinski.
Consumption, so far the main driver of Poland’s economic growth, will probably weaken next year as wage growth slows down. That will make the international economic landscape a more important factor in Polish growth, said the central bank head.
(Updates with more interview details from second paragraph)
©2024 Bloomberg L.P.
