A forecast economic rebound in Poland is not yet evident, yet it remains too soon to contemplate interest rate cuts, according to statements by a central banker on Thursday.
Supportive of tighter monetary policy, Ludwik Kotecki backed – in the minority - a 25-basis point rate rise at the central bank's meeting in April, as per the most recent voting records.
The central bank left its main interest rate unchanged on Tuesday at 6.75%, where it has remained since last year. The Narodowy Bank Polski (NBP) and others in central Europe have paused policy to allow time for rate increases announced in 2021/22 to work to tackle soaring inflation, Reuters reports.
Kotecki said he would make another assessment after looking at updated bank forecasts in July, he told Business Insider.
"The economy was supposed to start growing from the second quarter. However, this rebound in the second quarter is not visible," he commented.
The Polish economy decelerated 0.3% year-on-year in Q1. Whereas last month, inflation edged down to a 13.0% headline rate, the lowest in more than a year. As it stands, the central bank's inflation target is 2.5%, with a one percentage point tolerance range, the Reuters report adds.
"We are so far from NBP's inflation target that it is too early to talk about any interest rate cuts," Kotecki added.
Poland's markets are currently pricing in chances of rate cuts later in the year.
The central bank has not signalled its hiking cycle has come to an end, yet earlier this week, Governor Adam Glapinski said if inflation lowers to single digits and continues to fall, then rate cuts were possible.
Kotecki said an inflation slowdown was in line with forecasts and not a new factor.
"I will be paying close attention to NBP's July projection because it seems that since the previous forecasts, the situation in the real economy is worse, and this is new information for me," he said to Business Insider.
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