The monetary and credit policy council will not change interest rates at the January meeting – says Pekao Bank economist Kamil Luchkowski. According to him, reductions may take place in the third quarter of this year as soon as possible. The two-day MPC meeting will begin on Wednesday.
On the first day of the meeting, the Council will get acquainted with the second reading of inflation for the month of December, which will show a detailed breakdown of individual indicator categories. According to preliminary data, the inflation rate reached 4.8 percent in December. increased by 0.2 percent from 4.7 percent. under consensus.
A decision on interest rates will be made on Thursday.
– We do not expect any change in the interest rate, and this is the general opinion. We expect the prices to be reduced in the third quarter of this year as soon as possible, said Kamil Luckowski. He added that the markets will listen carefully to the approach of the Governor of the National Bank of Poland and the Chairman of the Monetary Policy Council, Adam Glapinski.
Glapinski was surprised
The economists of the bank recalled the President’s speech from December, in which he surprised the market with very funny speeches. Glapinski’s words further hinted that the Monetary Policy Council will not cut rates in 2025 due to the end of the electricity price freeze, which could lead to a significant increase in inflation in the fourth quarter of this year.
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After Glapinski’s statement, the relationship between the opposing wings of the Soviet became more diverse. Some members of the MPC still believe that the discussion on the rate reduction can begin in March (Wnorowski, Kotecki), others point to the third quarter (Dabrowski, Litvinyuk – “after the election”). A similar signal to Glapinski’s position was sent by Gabriela Maslowska, who did not rule out price reductions only in the first quarter of 2026.
– We still don’t really know what will happen after the end of the electricity price freeze. Taking into account the valuation of electricity futures contracts, it can be assumed that the electricity prices set by the Energy Regulatory Office in the new tariffs for households will not differ much from the current prices, so we do not expect an increase in inflation. It is also possible that the government will extend the freeze on electricity prices, economist Pecao said.
But he admitted that he did not expect a deep decline this year. In his opinion, among other things, this will not be allowed. persistent core inflation.
– We believe that July will be a good time to start the tapering period, when the Monetary Policy Council will get acquainted with the new inflation forecast. Then, a gradual decline can be expected. In total, we will cut 100 basis points over the course of 2025, said Kamil Luchkowski.
Currently, the main interest rate of the NBP, the reference rate, is 5.75%. The last time the Monetary Policy Council reduced the interest rate of the Central Bank in October 2023.
Main photo source: PAP/Radek Pietruszka
