Dabrowski Plays Down Inflation Spike Expectations, Says Rate Cut Possible Near Year-End

NBP's Ireneusz Dabrowski told Interia.pl this morning that he sees a chance for a rate cut towards the turn of the year, albeit it is too early to say when it might happen.

• The MPC member told the news website that he expects inflation to increase at the beginning of 2023, but only slightly, adding that prices are unlikely to grow as fast as expected by the financial markets.
• He suggested that core inflation may take more time to start easing. However, observed declines in factory-gate price growth as well as food and energy prices should eventually create a drag on core CPI inflation.
• The official noted that the economy appears to be behaving in line with a "soft-landing" scenario but a risk of hard landing remains. Still, the current level of interest rates appears "safe" enough to constrain demand without causing too much cost.
• Dabrowski drew a line between inflation expectations and wage expectations, noting that wage pressures in Poland are declining, which means there is no need to further increase interest rates.
• Despite pointing to the potential for rate cuts towards the year-end, Dabrowski refused to confirm that the rate-hike cycle has ended, arguing that it is too early to do so.
• Click here to see the full interview.