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NBP Head Adam Glapiński: Interest Rate Hike by RPP 'More Possible'
🇵🇱 Poland /Economy & Trade

NBP Head Adam Glapiński: Interest Rate Hike by RPP 'More Possible'

From Rzeczpospolita · (7h ago) Polish

Translated from Polish, summarized and contextualized by DistantNews.

TLDR

  • The head of Poland's central bank, Adam Glapiński, stated that an interest rate hike is "more possible" due to rising inflation.
  • He indicated that the probability of such a move has increased since the April meeting, especially if inflation exceeds the NBP's target range.
  • Glapiński described an interest rate cut as "very, very unlikely" unless a swift resolution to the Persian Gulf conflict occurred.

Adam Glapiński, the governor of the National Bank of Poland (NBP), has signaled a potential shift in monetary policy, indicating that an interest rate hike is now a more distinct possibility. Speaking after the Monetary Policy Council's (RPP) May meeting, Glapiński stated that the likelihood of raising rates has grown, particularly if inflation continues its upward trajectory and breaches the NBP's target range.

We are close to the upper limit of deviations from the NBP's inflation target [i.e., 3.5 percent]. Exceeding it with the forecast that this will continue is a direct reason to move towards raising interest rates.

— Adam GlapińskiExplaining the conditions under which the Monetary Policy Council might consider raising interest rates.

Glapiński emphasized the NBP's commitment to price stability, asserting that the council would not hesitate to act decisively if inflation trends negatively. He noted that while the current inflation rate remains within the target band, projections suggest a potential breach, which would necessitate immediate action. Conversely, he deemed a rate cut highly improbable, linking such a scenario to an unlikely, rapid de-escalation of the Persian Gulf crisis and the restoration of oil flow through the Strait of Hormuz.

Even if inflation were below this upper limit, but our internal projections indicated that exceeding it is unavoidable, then appropriate decisions would be made immediately. This is probable, but uncertain.

— Adam GlapińskiFurther elaboration on the NBP's proactive approach to managing inflation expectations.

The governor also addressed the factors influencing inflation, attributing the recent rise primarily to increased fuel prices stemming from the Persian Gulf conflict. However, he contrasted the current situation with previous crises, suggesting the impact on Poland's economy, particularly energy prices, is less severe. Glapiński highlighted the stability of the Polish złoty and the absence of major disruptions in global supply chains, apart from fuels, as mitigating factors. Despite these positives, the NBP remains vigilant about rising core inflation within the domestic economy.

A reduction in interest rates is described by the NBP president as 'very, very unlikely'.

— Adam GlapińskiDescribing the low probability of an interest rate cut in the current economic climate.
DistantNews Editorial

Originally published by Rzeczpospolita in Polish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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