Poland’s central bank governor Adam Glapinski has remained concerned about potential inflation reigniting, despite a recent fall in inflation rates. This is due to higher food taxes and the potential removal of energy price limits. The central bank is expected to maintain its interest rate at 5.75% for the seventh consecutive meeting, as reported by a Bloomberg survey of economists.
In March, Poland’s annual inflation rate dropped to 1.9% from the previous month’s 2.8%, surpassing market expectations of 2.2%. However, the Monetary Policy Council (MPC) notes significant uncertainty surrounding inflation fluctuations, particularly driven by fiscal and regulatory policies, economic recovery pace, and labor market conditions in Poland. While Finance Minister Andrzej Domanski has suggested lower rates could benefit the economy and budget, only a minority within the MPC supports further rate cuts until the impact of government energy pricing plans on inflation is confirmed.
Glapinski has expressed reluctance to cut borrowing costs, citing fears of inflation rising again. He believes that maintaining a stable interest rate will help keep prices under control and prevent any potential negative consequences from rising prices. Additionally, he argues that lowering rates would not be beneficial for investors or savers who rely on fixed-income investments.
Despite this concern, many experts believe that inflation will remain under control in Poland due to several factors such as low oil prices and stable currency exchange rates.
Overall, Glapinski’s concerns about potential inflation are understandable given his responsibility to maintain price stability in Poland’s economy. However, it remains to be seen whether his concerns will materialize or if inflation will remain under control with stable interest rates and favorable macroeconomic conditions.