Any interest rate cut would deviate from mandate and harm economy, says MPC member
Any interest rate cut at present, given Poland's central bank NBP March projection, would deviate from the central bank's mandate and harm the Polish economy, Poland's Monetary Policy Council member Joanna Tyrowicz, stated in an interview with Dziennik Gazeta Prawna.
Tyrowicz noted that a rate cut of approximately 1 percentage point over a two-year horizon would lead to inflation that is about 0.7 percentage points higher two years later.
This increase would push inflation beyond the upper deviation band from the target in 2027.
"If indeed wages have slowed down, then perhaps - in combination with other data - a rate of 5.75 percent from now on will be enough to bring inflation down to the target," she said.
She cautioned against the assumption in the March projection of a sharp decline in wage growth, as well as the maintenance of a high household savings rate.
Further, she noted that the strong zloty has supported lower inflation, but there is no guarantee this trend will continue. Any weakening of the zloty would intensify inflationary pressure on goods.
tus/ nl/
