Polish Central Bank May Delay Rate Cuts to Next Autumn, Says Glapiński
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Loading... - Cecile Sanchez
- 06 Dec 2024
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On December 5, Adam Glapiński, the Governor of the National Bank of Poland (NBP), indicated that the Monetary Policy Council (MPC) is unlikely to consider reducing the central bank’s reference rate before October 2025. This statement marks a notable shift from previous expectations that rate cuts could commence as early as mid-2025.
During a press conference, Glapiński emphasized that inflation risks could push any potential rate cuts into 2026. He stated, “The council will move to a debate, or even a decision, only when inflation stabilizes and projections clearly indicate a decline.” The MPC maintained the central bank’s reference rate at 5.75% on December 4, marking a 14-month freeze at this two-decade high. This decision aligned with market expectations, reflecting ongoing inflationary pressures despite some recent easing.
Inflation remains a critical issue in Poland, with the consumer price index (CPI) rising 4.6% year-on-year in November, a slight decrease from 4.9% in October. The NBP has identified several factors contributing to sustained high inflation, including increases in energy prices, planned excise duty hikes, and rising costs of administered services. The anticipated unfreezing of energy prices in late 2025 adds further uncertainty, potentially delaying any rate cuts.
ING Bank noted that this situation could postpone the return of inflation to the central bank's target by six months compared to the baseline scenario outlined in the NBP's November projection, thereby delaying the start of the easing cycle.
Analysts have observed a more hawkish tone in the NBP's December statement, contrasting with a more lenient outlook in previous months. ING commented, “Any dovish pivot is premature,” highlighting the renewed focus on energy price risks. The current restrictive monetary policy reflects the NBP's commitment to controlling inflation, with future decisions likely contingent on inflation dynamics and economic forecasts.
As the NBP navigates the complexities of inflation and economic stability, the timeline for potential rate cuts remains uncertain. The central bank's approach will depend on clear evidence of declining inflation, with Glapiński's recent remarks signaling a cautious stance in the face of persistent economic challenges.
