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MPC Hawk Kotecki Says Hawkish Risks Are Materialising, Keeping Rate Cuts Off Table

NBP

The current level of interest rates does not guarantee a return to the inflation target, NBP's Ludwik Kotecki said at the European Economic Congress in Katowice. The official noted that "from the point of view of pursuing [the aims of] monetary policy, it is still inadequate."

  • In an interview with ISBNews on the sidelines of the Congress, Kotecki said that he sees no room for lowering interest rates this year and no room for discussing rate cuts, because of the emergence of new risks after the release of the NBP's latest macroeconomic projections.
  • "After the [publication of] the March projections we have seen events which cast doubt on it - namely OPEC's decision to cut output and the risk that the prices of some food items will not fall as quickly as assumed in our projections."
  • "New risks suggest that CPI inflation may be higher than in the March projection, which means that even more than before there is no room for discussing interest-rate cuts today."
  • Kotecki noted that the NBP should be ready to tighten monetary policy, which could happen through interest-rate hikes or quantitative tightening. The official pointed to loose fiscal policy in the election year as another risk that should keep rate hikes on the table.

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