NBP President: We can forget about reducing interest rates

Traditionally, the day after the decision of the Monetary Policy Council (MPC) on interest rates, the President of the National Bank of Poland (NBP), who is also the Chairman of the Council, Adam Glapiński, took the floor.

Let us recall that on Thursday, the body decided to keep interest rates unchanged for the ninth time in a row. Thus, the main reference rate remains at 5.75%.

– It was not a surprise. No one, both in the domestic and international markets, expected a different decision. The situation is clear – the head of the central bank said at the beginning of the conference.

Glapiński stressed that inflation in June “was in line with the NBP inflation target” for the fifth month in a row. According to preliminary data from the Central Statistical Office (GUS), it amounted to 2.6%.

– While we are happy that inflation has been in line with the target for almost half a year (in layman’s terms, there is no inflation), let us not forget that our decisions, the decisions of the Monetary Policy Council, affect the future – the President of the National Bank of Poland emphasized, adding that the aim of the Monetary Policy Council is to “strive to permanently stabilize inflation at a level consistent with the target”.

Glapiński cited forecasts showing that price dynamics in Poland will increase in the second half of the year. – The expected increase in inflation in the second half of the year results from unfrozen energy prices, i.e. the so-called supply factor, independent of the monetary policy of the National Bank of Poland. We assume that due to this, consumer prices will increase in July 2024 by approx. 1.6%, and then, in January 2025, by another approx. 1.3% – said the head of the NBP.

According to the central bank’s forecasts, inflation could reach 5% by the end of this year. “Inflation could still increase a bit at the beginning of next year. Then, these maximum electricity prices will cease to apply, and the so-called capacity fee will be reinstated,” Glapiński explained.

In 2026 – as forecasted by the National Bank of Poland – inflation should return to the level consistent with the inflation target. This will happen – as Glapiński explained – if the Monetary Policy Council decides to maintain interest rates at the current level.

– It is already obvious now – we can forget about reducing interest rates when inflation is growing significantly – from 2.5 to almost 5 percent. Such an opportunity (to reduce interest rates – ed.) may appear in 2026 at the earliest, when inflation starts to fall – said the President of the National Bank of Poland.

The next decision-making meeting of the Monetary Policy Council is scheduled for early September.

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