Hesitation in Central Bank Rate Cuts: Concerns over Inflation in Poland

Despite a recent fall in inflation rates, Poland’s central bank governor remains concerned about potential inflation reigniting due to higher food taxes and the potential removal of energy price limits. The Monetary Policy Council (MPC) has noted significant uncertainty surrounding inflation fluctuations, particularly driven by fiscal and regulatory policies, economic recovery pace, and labor market conditions in Poland.

Finance Minister Andrzej Domanski has suggested lower borrowing costs could benefit the economy and budget, but only a minority within the MPC supports further rate cuts until the impact of government energy pricing plans on inflation is confirmed. Central Bank Governor Adam Glapinski has expressed reluctance to cut borrowing costs, citing fears of inflation rising again.

The central bank is expected to maintain its interest rate at 5.75% for the seventh consecutive meeting, as reported by a Bloomberg survey of economists. However, with uncertainty surrounding inflation fluctuations and higher food taxes potentially driving up prices, Glapinski is hesitant to make any changes that could lead to an increase in inflation rates.