It’s not like we have written down steps. As it is written in the statement – subsequent decisions will be based on current data – said Ludwik Kotecki, member of the Monetary Policy Council, in an interview for Biznes24, when asked about the next decisions of the body regarding interest rates. However, Kotecki predicts that there will be no reduction this time.
Last week, during the first meeting after the summer break, the Monetary Policy Council (MPC) decided to reduce interest rates by as much as 75 basis points. The move surprised markets as a cut of at most 25 basis points was expected.
Another interest rate cut in October?
MPC member Ludwik Kotecki, in an interview for Biznes24 television, was asked about the Council’s next decisions regarding interest rates. – I can honestly say that I don’t know (what the Monetary Policy Council will do in October – ed.). It’s not like we have written down steps. As it is written in the announcement – subsequent decisions will be based on current data – Kotecki said.
Later in his statement, the MPC member emphasized that he assumed that there might be a “pause” this time. – I assume that after such a rather radical reduction in interest rates in September, which does not fit into conventional monetary policy, we will have a pause in October, but we will see what life brings at the beginning of October – Kotecki said.
The Biznes24 guest pointed out that inflation (also core) is above 10%, and the fiscal policy declared by the government for next year is expansionary, and therefore also pro-inflation. Indexation of social transfers and an increase in the minimum wage are also planned. According to Kotecki, there is a lot of uncertainty about the transfer of previous cost shocks to prices. Therefore – in the opinion of the MPC member – conditions sufficient to ease monetary policy were “far from being met” in September.
– I do not see such a cataclysm that would justify such a radical move – said the MPC member.
Kotecki on the backstage of the last MPC meeting
In an interview for WP’s “Newsroom” program late last week, Kotecki revealed the backstage of the last MPC meeting, revealing what happened when the decision to reduce interest rates was announced so radically. – When it was announced, there was silence. We are already seeing the effects. The zloty weakened significantly. This is the best test showing that this decision was wrong – said the MPC member.