Adam Glapiński on interest rates and inflation. Conference of the President of the National Bank of Poland

We do not expect a recession in Poland, but it could happen that we will reach a GDP growth rate around zero, the President of the National Bank of Poland, Adam Glapiński, said at a press conference on Thursday. According to Glapiński, “the situation in the world is becoming disinflationary”. In Poland, according to the head of the National Bank of Poland, inflation is expected to rise in January and February, then start to fall. Glapiński added that the MPC considers the current level of interest rates “optimal”.

The president of the National Bank of Poland said that “in our neighbors and in all developed countries” the economic situation is deteriorating. He added that “in many countries the situation is heading towards recession”.

Adam Glapiński on inflation

Glapiński said that “the situation in the world is becoming disinflationary”. – The pace of economic growth is decreasing, inflation remains at high levels, but will decrease. We expect that in January and February there may be a price increase due to the change in regulated prices – he said.

He stated that the NBP was trying to “push inflation below the inflation target as soon as possible”. But we don’t want to throw the baby out with the bathwater. We don’t want to cause an economic crisis, mass bankruptcies, high unemployment, she said.

Inflation it’s very high, it’s always a plateau – ups and downs, but there’s no uphill. (..) We expect that there will be an increase in January-February, but from the end of the first quarter of March-April, inflation will begin to fall systematically and rapidly, it will be a lasting process, the NBP president predicted.

– I would like the word “crisis” to be limited to inflation, because we are finally on this plateau – indicated Glapiński. And he added: – Contrary to the malcontents, all projections, including those of international institutions, show that by the end of next year inflation will drop to single-digit inflation, between 6 and 9 percent, of course, as long as the circumstances They do not change.

What is the prospect of an interest rate cut?

– If the pace of decline is that rapid, some economists, but also interest rate markets, are increasingly pricing in the growing likelihood that interest rates will fall in the final quarter of next year. I am not announcing this (…), because we are constantly observing the situation that will be – said Glapiński.

– Of course, this will simply be the result of what happens with inflation, assuming that inflation will be lower and lower – he added.

According to Glapiński, the level of interest rates is currently at the “optimum level” according to the MPC. – This is the level that significantly cooled the economic situation. We have practically reduced the level of mortgages and consumer loans to a minimum – he said -.

He pointed out that this is a serious problem for many people. – These feet grow, you have to grit your teeth and then they will fall off. I hope to be able to repeat it in the last quarter of next year.”

When questioned at the conference, the NBP chairman said the MPC did not decide to end the cycle interest rate increases. – The March projection (NBP inflation – ed) will tell us a lot. I hope it will show declining inflation, (…) that we will be convinced that we are finally on a permanent decline in inflation and then the discussion in the Council will be, (…) whether to end the hiking cycle, but if it happens, (…) between screenings, let’s talk carefully,’ he said.

“There is less and less room to raise prices”

Glapiński was also asked about core inflation. – As soon as next year, core inflation will start to fall. Producers will have less and less room to raise prices, he assessed.

He added that the NBP does not assume this decline will stop at a certain level, but – as he noted – it will also mean a decline in economic activity. However, this should not cause unemployment to rise in Poland, she added.

– The level of core inflation does not give rise to particular worries for the moment – underlined Glapiński. As he noted, NBP estimates show it’s currently around 60%. of inflation is generated by external factors and about 40%. within the country.

– As time goes by, more and more inflation is generated in Poland and NBP affects this part. By reducing purchasing power and reducing credit, we have hit core inflation – said the president of the National Bank of Poland. He added that this will mean a decrease in demand. -Demand will shrink, the demand gap will be closed- he assessed.

Glapiński: We don’t make sudden jumps

– We conduct a very prudent policy, we do not make sudden jumps – said the head of the NBP. He stressed that this applies to both interest rates and “other elements.”

– The government, as far as I can say something about the government, why shouldn’t I, is doing very reasonable actions, looking at their effects. He doesn’t spend too much money, but he also doesn’t limit spending where it is needed – said Glapiński.

The president said the current situation is commonly called a crisis, but “there is no crisis in the economic sense.” – Always ours PKB, our national income grows, the economy develops, there is no unemployment, indeed (…), there are no bankruptcies. It can be said that Poland’s economic and financial situation is exceptionally good compared to European and EU countries, she said.

In his view, state interference in market mechanisms should be delicate, sensitive and as brief as possible. – This is how both the NBP and the government act in Poland – he noted. As you mentioned, in Hungary the government is at a standstill fuel prices, and after a few months there was disorganization, forcing the government to unfreeze these prices. – Hungary will probably become the country with the highest inflation in the EU – estimated Glapiński.

MPC decision on interest rates

The Monetary Policy Council decided on Wednesday maintain NBP interest rates at an unchanged level. This decision was expected by most economists. The main reference interest rate is 6.75%.

interest rates PAP

Read also: Interest rates unchanged. “The cost will be much higher inflation”

According to data from the Central Statistical Office, inflation in Poland in November 2022 was 17.4 percent year-on-year. Compared to the previous month, prices increased by 0.7%. According to data from the Central Statistical Office In 2017, food and soft drinks increased by 22.3% year-on-year, energy carriers by 36.8% and fuels for private means of transport by 15.5%.

photo-source">Main photo source: TVN24

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