Inflationary pressure will most likely weaken, while inflation will reach a single-digit level at the end of 2023, dropping significantly, perhaps near the upper limit of the NBP target of +/- 3.5%, believes the governor of the National Bank of Poland (NBP) and the chairman of the Council Monetary Policy Policy (MPC) Adam Glapiński.
According to him, the key factor for the further path of monetary tightening will be the condition of the Polish economy and its support in the event of a significant weakening.
Inflationary pressure will probably gradually weaken
– The most important thing is that the inflationary pressure will probably gradually weaken. However, we will probably achieve single-digit inflation only at the end of 2023. We should remember that the exact course of inflation depends on many factors, including the duration of the anti-inflationary shield.
The government has yet to announce it, but it is possible that the shield will still be in place by the end of next year and that its phasing-out will be gradual. And then inflation in the last quarter of next year should drop significantly, perhaps even to a level only slightly exceeding the upper limit of the NBP target of +/- 3.5%. – Glapiński said in an interview for the weekly Gazeta Polska.
As he emphasised: – The most important thing today is the fight to lower inflation, although at the same time it will also be important to support the economic situation, especially if it is clearly weakened .
Glapiński pointed out that the discussion on interest rate cuts “does not seem like a near prospect so far”.
– So we will discuss interest rates in September and then we will assess the situation. If in the following months it turns out that the demand factors behind inflation are slowing down and there is a risk of a significant economic downturn, then there will be conditions for discussing possible interest rate cuts, but for now it does not seem like a near prospect – explained the MPC chairman.
The NBP president expects that there will be no conditions for an economic crisis to emerge in Poland.
Sligtly GDP decline
Glapiński pointed out that “for the next two quarters this year our economy will see some sligtly GDP decline de on a quarter-on-quarter basis ”.
We will see at the end of the year what it will be like. In any case, we are not dealing with an economic crisis at the moment. Of course, it can never be completely ruled out that a crisis will actually occur in a country, but not in Poland. There are no grounds for this – summed up the head of the central bank.