The rising inflation and weakening Polish złoty, which increases import costs, could further postpone the prospect of interest rate cuts in Poland. The Monetary Policy Council is most likely to stick to its decision – unchanged for over a year – keeping interest rates without changes – comments Tomasz Gessner, chief analyst at Tavex.
In the afternoon hours, we will know the Monetary Policy Council’s decision on interest rates. The market consensus assumes that the rates will remain unchanged at 5.75%. The last time the Council changed the interest rates was in October last year. Although the first interest rate cuts have already occurred in most of the main central banks, with the American and European at the forefront, our Council’s hands are somewhat tied in this regard due to the rising inflation again.
According to preliminary data for October, the annual CPI inflation is already at 5% and it is the 7th consecutive higher reading. It was only 2% in March. As long as the trend of rising inflation is not reversed, inflation will not start to head towards its goal and will not be firmly anchored in it, the issue of interest rate cuts in Poland will not be a subject of discussion.
It is also worth adding that over the past two years we have noticed a clear strengthening of the złoty. Around September 2022, the main currencies cost over 5 PLN. Their rate decline also helped bring inflation to lower levels. However, in recent weeks we have seen a change of direction in the charts of major currencies and the złoty has started to weaken noticeably again. The rising import costs would most likely not assist in controlling inflation in the coming months, which can further postpone the next interest rate cut by the Monetary Policy Council.
Source: https://managerplus.pl/ponad-rok-bez-zmian-kiedy-rpp-obnizy-stopy-procentowe-32174
