Poland's MPC may cut rates in September, main rate 'with front four' by end-2025, says member (interview)
Poland's Monetary Policy Council member Henryk Wnorowski does not rule out another interest rate adjustment in September and sees the main rate "with a front four" at the end of 2025, according to his statements made in an interview with PAP Biznes. Wnorowski points out that the persistence of inflation and loose fiscal policy argues against a quick and deep rate cut. In his view, rate adjustments should be made in 25 basis points steps.
"I do not rule out another rate adjustment in September, while the need for caution in monetary policy should be kept in mind and emphasised. The threat of inflation persistence continues to argue against a rapid and deep rate cut in the main," Wnorowski told PAP Biznes.
"I recall that June's CPI reading of 4.1 percent was the worst in the entire European Union. However, in my view, the most important argument against rapid and significant cuts is a very loose fiscal policy. The key in this respect will be the budget for next year, which we will know in September," he added.
Regarding the rates path until the end of the year, Wnorowski assessed that he wouldn't rule out different scenarios, stipulating that there are a lot of uncertainty factors.
"So far, I have said that I see a reference rate 'with a front four' at the end of 2025, so just one more adjustment of 25 basis points would be enough, and this condition would be met," the MPC member said.
"If there were several such adjustments - the 'front four' will also be there. On the other hand, I do not see a huge number of moves, I would not go this far," he added.
The Monetary Policy Council at its decision-making meeting on July 1-2, 2025, unexpectedly cut all Poland's central bank NBP interest rates by 25 basis points. The reference rate is now 5.00 percent.
Poland's central bank governor Adam Glapinski told a press conference on Thursday that a rate cut is possible in September given favourable circumstances, but that the MPC is not announcing an easing cycle.
He pointed out that when the Council adjusts rates, it will wait at least a month before making another move. He added that with a sustained descent of inflation to the target, the reference rate could even go down to 3 percent.
According to Wnorowski, if the MPC continues with adjustments, they should be made in steps of 25 basis points, not more.
"And these rate adjustments may still take some time. Perhaps until the issue of the energy price-freezing shield is definitely resolved, because we still don't quite know what is going to happen with it," he assessed.
"There is supposedly a price freeze announced until the end of the year, but the legislative process is ongoing, so it is impossible to be sure in what shape this will come into effect," the MPC member added.
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