Poland’s central bank governor, Adam Glapinski, remains concerned about potential inflation reigniting despite a recent fall in inflation rates. 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. This decision comes as the MPC notes significant uncertainty surrounding inflation fluctuations, particularly driven by fiscal and regulatory policies, economic recovery pace, and labor market conditions in Poland.
In March, Poland’s annual inflation rate dropped to 1.9% from the previous month’s 2.8%, surpassing market expectations of 2.2%. While Finance Minister Andrzej Domanski has suggested lower rates could benefit the economy and budget, only a minority within the MPC supports further rate cuts until the impact of government energy pricing plans on inflation is confirmed.
Glapinski has expressed reluctance to cut borrowing costs, citing fears of inflation rising again. He believes that higher food taxes and the potential removal of energy price limits could lead to an increase in prices, which would reignite inflationary pressures. As such, he is hesitant to make any significant changes to monetary policy until there is more clarity on these factors.
Despite this concern, Glapinski has acknowledged that lower interest rates could help stimulate economic growth and reduce unemployment in Poland. However, he believes that it is important to strike a balance between supporting economic growth and maintaining price stability. In order to do this, he is calling for greater transparency and predictability in government policies related to energy pricing and taxes.