Author: rs
Added: 10-07-2023 09:00 | Update: 10-07-2023 09:50
It is too early to discuss interest rate cuts in September or October. But perhaps then we will see single-digit inflation, and let it happen, says member of the Monetary Policy Council Ludwik Kotecki.
The expected recovery in the Polish economy has not arrived and it may not appear in the third quarter, and certainly not as strong as previously forecasted – said Ludwik Kotecki in an interview with Business Insider Poland.
We are approaching the level of GDP growth forecast by the International Monetary Fund for Poland, i.e. 0.3 percent. This is a much worse outlook for this year and a worse starting point for next year. This is one of the reasons for the amendment of the budget for this year. Although the National Bank of Poland should not complain – added a member of the Monetary Policy Council.
Poor macroeconomic environment will be conducive to disinflation
According to Kotecki, the poor macroeconomic environment will be conducive to disinflation to a much greater extent than it seemed. “Although, of course, it is not the case that there are no risks for too slow and too long-term inflation,” noted Ludwik Kotecki.
In his opinion, a very big element of inflation risk is wage growth dynamics. “We have to watch closely what will happen to wages in the coming months. There is no consensus among economists here. Despite the fact that we are in economic stagnation, nominal wages continue to grow at a double-digit rate,” he stressed.
Too fast interest rate cuts will prolong reaching the MPC’s inflation target
In his opinion, too fast interest rate cuts will prolong reaching the MPC’s inflation target. “The inflation projection adopted at the last meeting of the MPC shows that at the rate of 6.75 percent, inflation will not come down to the target even in 2025. If we lower the rates, the moment of reaching the inflation target will be extended to 2026, or We can already feel how much inflation costs on our own skin – Ludwik Kotecki told Business Insider Polska.
“First, inflation in the projection must reach the NBP inflation target, which – let me remind you – is 2.5% plus or minus 1 percentage point. We have to see it with a probability of not 30%, but 80-90%. discussion about some safe adjustment of interest rates – said the member of the MPC.
The whole conversation with Ludwik Kotecki is available on the Business Insider portal.
2023-07-11 08:27:28
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