Polish inflation is expected to decrease gradually and should the government implement stricter fiscal policies, it might be feasible to consider “responsible” interest rate cuts by the second quarter of 2025, according to Ludwik Kotecki, a member of the Monetary Policy Council.

In June, Poland's central bank maintained its main interest rate at 5.75% for the eighth consecutive month, as anticipated, due to uncertainty about future inflation trends, Reuters news agency reports.

Central bank governor Adam Glapinski stated that there is a “zero” chance of interest rate cuts in Poland in 2024 due to anticipated inflation increases. However, rate cuts might be possible in 2025.

“The main parameter is, and will be, inflation. It will decrease, although slowly,” stated Kotecki in a newspaper interview published on Monday.

“If we have some tightening on the fiscal side, it will not be inconsistent with thinking about responsible rate cuts in the second half of next year, maybe even in the second quarter," he commented in the Dziennik Gazeta Prawna daily. 

Furthermore, May's inflation rate of 2.5% fell within the central bank's target range of 1.5% to 3.5%. However, it is expected to accelerate in the second half of the year. 

According to Kotecki, inflation may exceed 5% by the end of 2024. “In August, inflation is likely to break through the upper band of deviations. It seems that at the end of the year it could be over 5%, with core inflation between 4% and 5%,” Kotecki said.