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Polish Central Bank Not Ending Tightening Cycle To Have Optionality Amid Risks


NBP Governor Adam Glapinski has now moved to a Q&A session. The first question touched upon the expected duration of the period of stable interest rates.

  • The Governor says that the central bank has not formally ended its rate-hike cycle because keeping inflation in check remains its main objective. Meanwhile, upside risks to the inflation outlook remain, both domestically and internationally.
  • He stresses that officials are acting "pragmatically" and could still raise interest rates if CPI inflation soars again. The Governor notes that the NBP "will not tolerate a break of the disinflationary process."
  • Still, Glapinski reiterates his hope that rates could be cut in 4Q2023, if there is clear evidence of inflation reaching single digits and easing towards the target. He stresses that it is just his personal opinion, not the MPC's collective view.
  • Glapinski urges politicians not to call for large wage hikes in the public sector and criticises demand-side solutions of Poland's housing shortages, which he says complicate the central bank's efforts to contain inflation.
  • Note that Poland is heading into a parliamentary election this autumn, which is conducive for generous fiscal proposals.

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