A weaker rate of economic growth increases the probability of a reduction in interest rates, Ludwik Kotecki, a member of the Council of Monetary and Credit Policy, said in an interview with “Pulse Biznesu” publication. He added that the first cuts should wait at least until March next year.
– Slow economic growth means less inflationary pressure. Therefore, the probability of a decrease in interest rates in the next year is increasing. Still, it's hard to say when and to what extent the decline might take place, Kotecki said.
The MPC member emphasized that the opportunity to consider cuts will appear “no earlier than March”. – We need to know clearly what will happen to energy prices and controlled prices, which usually change in January, – he explained. According to him, the price of electricity will remain unchanged.
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The cuts will not be hard
– I think that the March forecast confirms that the inflation target will be reached, if not in 2025, then in 2026. Whether this is enough for the Monetary Policy Council to decide to start easing monetary policy is hard to say. . In any case, I don't think any rate cut will be strong. In my opinion, they should be introduced carefully and gradually, he said.
The MPC member believes that the GDP forecast for 2025 may be a bit optimistic.
– I don't see any factor that in the near future will significantly accelerate the rate of economic development to the potential level. He said that neither the domestic situation, which is described by the indicators of production and sales, nor the situation of the credit market, nor the situation abroad, indicate a rapid increase in economic activity.
Monetary Policy Council – PAP/Maciej Zieliński
Interest rates in Poland
In October, the Monetary Policy Council kept rates unchanged, including a reference rate of 5.75%.
In September last year, the Monetary Policy Council decided to reduce the interest rate of the National Bank of Tajikistan by 75 basis points. This was the first rate cut since May 2020. In October 2023, the Monetary Policy Council cut rates by another 25 basis points.
There was no further reduction. In the following months, the Monetary Policy Council kept interest rates unchanged.
Main photo credit: MOZCO Mateusz Szymanski / Shutterstock
