The MPC is cutting interest rates. Glapiński comments
The third reduction in interest rates this year has become a fact. Glapiński indicates the reasons for the decision of the MPC.
Inflation in Poland is falling and is already close to the goal set by the National Bank of Poland (NBP). This is what opened the way to the next decision of the Monetary Policy Council (RPP). On Wednesday, September 3, the MPC reduced interest rates by 0.25 percentage points, which means the third cut this year. On Thursday, March 4, the President of the NBP presented the reasons for the decision and forecasts for the next months.
– This foot is lazy, although significantly reduced, is still relatively high. Comparing to the amount of inflation, the second largest amount among the countries of the region. Why is it higher? Because we are still fighting inflation. In August we achieved 2.8 percent. – Adam Glapiński, president of the National Bank of Poland (NBP) said during today’s press conference.
Inflation forecasts and risks for Poles’ wallets
Although inflation is falling, the head of the central bank warns that in the following months the situation may change.
– We will not allow high price dynamics to consolidate, which may appear – said Glapiński. He added that NBP forecasts assume an increase in inflation, and electricity prices remain a large unknown. A special problem is base inflation, which can make it difficult to quickly return to full price stabilization.
– We must be more sensitive to permanent price stability. Our further decisions will depend on the incoming data – he emphasized.
Fiscal policy under the magnifying glass of the NBP
During the conference, the President of the NBP also referred to the situation of public finances.
“Expenses are large, small revenues, the debt increases very quickly,” he said.
He pointed out that in terms of debt to GDP, Poland is only ahead of Romania. He also criticized the deficit policy, emphasizing that it cannot be explained only with growing expenses for national defense. As he noted, they are only responsible for 1/5 of public debt.
The MPC is careful in terms of interest rate reduction
Glapiński pointed out that the costs of servicing the debt of the state consume about 2.5 percent. GDP. He also emphasized that the MPC is conducting monetary policy in a careful and predictable way. He also added that the goal of the central bank is to avoid violent moves that could lead to the need to quickly raise interest rates, as is the case with the Czech Republic.
