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Governor Says Rate Cuts Will Be Possible Only When CPI Stabilises Sustainably Within Target

NBP

Governor Glapinski turns to a discussion of disinflationary factors - the main one is the current level of real interest rates, which are firmly positive. Glapinski says that the MPC effectively keeps tightening policy, as nominal rates remain stable amid falling inflation. He adds that this is not an ideal state of affairs, but it's a necessary course of action as inflation accelerates again.

  • The Governor points to a strong decline in PPI, which is testament to low cost pressures in the economy, despite the aforementioned robust wage growth.
  • Also on the disinflationary side - the zloty remains strong because of the NBP's monetary policy, which limits imported inflation.
  • The Governor guides that rate cuts will be possible once inflation stabilises sustainably within the target (+2.5% Y/Y +/- 1pp) but refuses to offer any details, while flagging data-dependence.
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