Core inflation to be higher in coming quarters amid marked growth in domestic demand - MPC
Poland's Monetary Policy Council assesses that inflation will be markedly above target in 2025 and that core inflation will also remain elevated in the coming quarters, amid a continued economic recovery with a marked increase in domestic demand, the MPC said in its post-meeting announcement
"In the Council’s assessment, inflation this year will be markedly above the NBP inflation target, driven by the effects of the already introduced increases in energy prices, rises in excise duties and administered services prices, as well as the further unfreezing of energy prices in the second half of 2025," the Monetary Policy Council wrote.
"In the coming quarters, core inflation will probably also continue to be elevated, amid a further economic recovery with a marked increase in domestic demand," it added.
According to the MPC, in the medium term (under the current NBP interest rates level and amid the expected gradual decline in wage growth) inflation should return to the NBP target.
"The impact of elevated inflation on inflation expectations and wage pressure – especially amid a rising demand and low unemployment – remains an uncertainty factor," the statement wrote.
"Inflation developments over the medium term will also be affected by the further fiscal and regulatory policy measures," it added.
The content of the paragraph remained unchanged from the previous statement, except for the addition of a mention of increasing demand.
The Monetary Policy Council (MPC) again assessed that the current interest rates of Poland's central bank NBP support achieving the inflation target in the medium term. Further decisions will depend on incoming information about inflation and economic activity.
The NBP will continue to take necessary actions to ensure macroeconomic and financial stability, primarily to ensure a lasting return of inflation to the NBP's inflation target in the medium term.
The MPC reiterated that the NBP may use foreign exchange market interventions.
For the third month in a row, the MPC did not mention the anti-inflationary impact of a stronger zloty.
The MPC maintained all NBP interest rates at the current level during its meeting on March 11-12, 2025, with the reference rate remaining at 5.75 percent.
The decision was in line with market consensus. The MPC has kept rates unchanged since October 2023.
A press conference with NBP governor Adam Glapinski will be held on Thursday, March 13 at 3 pm.
tus/ nl/ han/
