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Glapinski & Morawiecki See Chance Of Rate Cut By Year-End, Kotecki Sounds Sceptical

POLAND
  • In a speech at a TV Republika award gala, NBP Governor Adam Glapinski said that a "temporary cooling of economic activity will support the decline in inflation." He added that inflation is expected to ease "significantly" by the end of this year, which will result in a recovery in real wages. The Governor continued to defend the central bank's monetary policy stance, arguing that the decision to halt the tightening cycle and aim for a "soft landing" helped avert an economic crisis. Glapinski expressed hope that rate cuts could be possible as soon as in 4Q2023, but emphasised that they would be implemented only when the NBP is certain that inflation is under control.
  • Hawkish MPC member Ludwik Kotecki was more sceptical about the prospect of rate cuts being possible by the year-end. In an interview for Radio Zet this morning, he reiterated that new social spending will boost inflation, but refused to assess specific proposals. The official questioned the credibility of Governor Glapinski's estimates of the inflationary impact of boosting child benefit payments and suggested that Glapinski stepped outside of his mandate by commenting on the election campaign. Kotecki noted that even before the latest election pledges were unveiled, projections suggested that inflation would return to the target only in 2025. He added that the MPC was late with raising rates by "at least half a year."
  • Prime Minister Mateusz Morawiecki told PR24 that in his view CPI will keep falling during the remainder of the year and there is "hope for an interest-rate cut in Q4." PAP newswire commented that economists who took part in its survey expect the NBP to keep rates unchanged through the end of 2023.
  • A busy legislative week continues, with parliament set to discuss lowering the minimum number of judges constituting the full bench of the Constitutional Tribunal. Elsewhere, Onet reports that Defence Minister Mariusz Blaszczak refused to testify to a parliamentary committee on an incident involving a stray Russian cruise missile and committee chair adjourned the meeting, even as opposition lawmakers wanted to continue the discussion.
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