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NBP To Release Inflation Report, Kotecki Says It's Too Early To Discuss Rate Cuts

POLAND
  • The NBP will publish its Inflation Report at the top of the hour, which will be followed by a presentation of detailed projections at 09:00BST/10:00CEST. The main figures were unveiled last week in the statement after the central bank's monetary policy meeting, during which the Council left interest rates unchanged for the tenth consecutive time. Governor Adam Glapinski used his subsequent press conference to officially declare an end of the tightening cycle, paving the way to rate cuts in the coming months. Glapinski said that the Monetary Policy Council could cut interest rates when inflation is in single digits and there is confidence that it will keep falling towards the target. According to Glapinski, the first cut could come as soon as in September, with the NBP preferring to move in 25bp increments once it fires the starting pistol on its rate-cut cycle.
  • NBP's Ludwik Kotecki told Business Insider that the central bank's updated macroeconomic projection confirms that inflation won't reach the target even in 2025, even assuming that interest rates will remain stable. In his view, cutting rates would delay reaching the target at least until 2026, which is why "it's simply too early for rate cut discussions in September or October." On the other hand, Kotecki said that Poland's economic recovery is weaker than expected, which makes the "wait-and-see" approach less risky. According to Kotecki, the MPC should only consider rate cuts if projections show inflation reaching the target with 80-90% probability, while easing policy a month or two after ending the rate-hike cycle would be premature.
  • Ruling Law and Justice leader Jaroslaw Kaczynski said that the party will unveil a comprehensive election manifesto after the summer holidays. He told i.pl that the new manifesto will be for the next eight years, because "we need a long-term perspective." Meanwhile, 300Polityka reported that the Cabinet may hold a meeting today to discuss a bill widening eligibility for free prescriptions, which is one of the ruling party's campaign pledges.
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