Elections to parliament are still a reason for various types of analyses. Commentators emphasize that it is true that Law and Justice won the most votes, but this Civic Coalition, Third Way and the Left have a chance to form a government. Credit Agricole experts note in their commentary that the new government team may have bad luck related to… the calendar. This may turn out to be extremely pro-inflationary.
The rest of the article is below the video
See also: An important signal for the market after the elections. “Poland returns to this table”
Analysts: New government a few days before the end of the year
“It is currently difficult to assess how quickly the new government will be appointed. However, this issue is of key importance from the point of view of short-term inflation prospects,” write the authors of the analysis.
They predict that the president will propose a candidate for prime minister from the winning party, i.e. Law and Justice. As a result, the Sejm can elect a new Prime Minister only on December 26. The new government “will take power only a few days before the end of this year.”
In accordance with the current legal status, at the beginning of 2024, the standard VAT rate on food will be restored and protective measures regarding energy prices (electricity, gas, district heating) will be discontinued. The new Council of Ministers will have little opportunity to adopt new legal acts before the end of this year. Therefore, at the beginning of the new year, a strong increase in inflation can be expected due to the expiration of the current protective measures, write the authors of the analysis. .
This is the price Poland may pay
The bank’s experts assume that inflation will amount to 5.3%. year to year in January, and on average in 2024 it will be 4.4%. “This forecast assumes the maintenance of protective measures in the field of electricity prices, only a limited increase in the prices of gas and heat energy, and the gradual (in three steps) restoration of the standard VAT rate on food,” they add. What price will Poland pay for the late formation of a new government?
Due to the probable course of the process of creating a new government outlined above and the time difficulties in adopting legal acts allowing for the extension of the current protective measures, we see a significant risk that inflation will be approximately 2 percentage points higher in January than we currently assume, write analysts.
In their opinion, an increase in inflation in the short term and its slower return to the inflation target would contribute to changing the Monetary Policy Council’s attitude to a more hawkish one. “Therefore, we see a significant upward risk for our interest rate path. The scale of monetary policy easing we expect in the coming months may materialize on a smaller scale than we have previously assumed,” conclude the authors of the analysis.
Rate the quality of our article:
Your feedback helps us create better content.
2023-10-23 15:11:40
#calculated #Poland #pay #late #formation #government
