Investing.com -- The central bank of Poland may consider reducing interest rates in July, depending on inflation conditions, as stated by policymaker Henryk Wnorowski. Wnorowski, who is an ally of Governor Adam Glapinski on the Monetary Policy Council (MPC), mentioned in an interview that the policymakers have been rightfully concerned about persistent inflation, particularly given that government policies designed to limit energy prices are due to end later this year.
The response to Glapinski's hawkish stance over the past two months has been termed as "hysterical" by Wnorowski, as he believes that rate cuts could still be a part of the agenda if the price growth projection for July is under control. He stated, "It’s possible that by July we will have found sufficient rationale in the Council for easing the restrictiveness of monetary policy. The key assessment will be whether we’ve beaten persistent inflation.”
In December, Glapinski had indicated that the benchmark rate might remain at 5.75% until 2026. However, MPC member Ludwik Kotecki suggested this week that the easing could begin in the July meeting following the presidential elections in Poland. The International Monetary Fund has also suggested that there could be room for cuts of up to 100 basis points during 2025.
Wnorowski stated that he plans to follow the governor's approach of waiting for incoming data. He expressed concern that the peak of inflation might occur in the second half of this year when the energy price caps expire.
In addition, Wnorowski mentioned that if the government decides to tighten fiscal policy after the presidential elections, it could influence the MPC. The council has previously stated that a loose budget policy has limited the room for rate cuts. However, Wnorowski does not anticipate a significant strengthening of the zloty, and therefore does not expect it to impact the decisions of policymakers.
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