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MPC's Kotecki Suggests Rates Will Remain Stable, Flags Difficulties Caused By Gov't Measures

NBP

NBP's Ludwik Kotecki told Gazeta.pl that the central bank is unlikely to raise interest rates this year, but there is no room for lowering them either.

  • Kotecki reiterated his call for tightening monetary conditions but conceded that there is no majority in the rate-setting panel behind the idea. He is one of the three officials in the Monetary Policy Council who continue to support higher interest rates.
  • The policymaker noted that CPI inflation will start decelerating from March after peaking above +19% Y/Y in February but also played down the importance of headline inflation. He said that the upward trend in core inflation makes any talk of rate cuts premature.
  • Kotecki called earlier press reports noting that the government considers extending mortgage payment holidays "surprising," adding that such ideas suggest that political leaders do not believe in quick disinflation and ensuing rate cuts.
  • He noted that mortgage payment holidays complicated the central bank's task last year because they "removed a whole segment of the economy from the influence of monetary policy. The official said that the prospect of the government implementing similar measures during the election year makes economic forecasting difficult.

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