Governor Sees Inflation Around +4.0% Y/Y Now & +2.5% In March, Expects Rebound Thereafter

Governor Adam Glapinski says that the economic picture and the reasons behind the MPC's decision have not changed much since January. He acknowledges that the on-hold decision was well-telegraphed and widely expected. The Governor notes that inflation is "around +4.0% Y/Y, maybe a bit above that" at the moment, after printing at +6.2% in December, and will likely approach the +2.5% Y/Y +/- 1pp target in March.

• Glapinski's rhetoric reflects the adjustments to the statement. The official says that the inflation outlook for 2H2024 comes with "very high uncertainty" and price pressures will largely depend on fiscal and regulatory decisions of the government.
• He adds that the NBP wants to bring inflation "sustainably" rather than just temporarily to the target, reiterating the message from yesterday's statement. He says that the NBP is focusing on the medium term.
• Glapinski shows a chart with one scenario assuming the termination of main anti-inflation measures and another one assuming the extension of those measures. The lines show CPI around +8% Y/Y and +3% Y/Y respectively at end-2024.
• The central bank assumes that the actual inflation path will be somewhere between the two lines but they refuse to speculate on the most likely trajectory for now. The Governor says that there may be more clarity in the next macro projection.
• Glapinski adds that core CPI is currently the main point of reference for the MPC going forward. Policymakers see it as reflective the dynamics they are able to influence.