Choir Of MPC Members Flagging Potential For '23 Rate Cuts Grows Louder

NBP's Henryk Wnorowski told ISBnews that headline CPI inflation could reach single-digit levels as soon as in August, although there are upside risks to the current downtrend from food prices and inflation expectations, which could be fuelled by potential further loosening of fiscal policy in the election year. The official said that should inflation reach single digits, the MPC could discuss cutting interest rates.

• Wnorowski admitted that inflation remains far from the central bank's +2.5% Y/Y target mid-point, but he was "hoping" that the July inflation projection will show a quicker path towards achieving the target than the March forecast. At the same time, he pointed to the structure of retail sales in Poland, where distributors take the opportunity provided by elevated inflation expectations to keep raising food prices.
• Separately, after the release of below-forecast May CPI earlier today, Wnorowski's colleague from the rate-setting panel Ireneusz Dabrowski tweeted that "preliminary data are very good," while pointing out that M/M price growth has ground to a halt. This comes on the heels of his TV interview last night, when Dabrowski said that if the current disinflationary trends continue, there might be room for lowering interest rates by the end of the year.
• Also yesterday, MPC's Iwona Duda said that the panel could decide to cut interest rates when members will see a "sustainable downtrend in inflation, with the perspective of its quick return to the target." While she refused to speculate on the timing of first rate cuts, she stressed that price pressures appear to be cooling in line with the central bank's forecasts.