Poland's MPC member Wnorowski sees grounds to support 25 bps rate cut in May (interview)
Poland's Monetary Policy Council member Henryk Wnorowski sees grounds that would allow him to support a 25-basis points rate cut proposal in May with great calm and responsibility, according to his statements made in an interview with PAP Biznes. He then recommends waiting until the July projection. In his view, the topic of the reserve requirement level will be discussed by the MPC soon.
"Taking into account how the discussion went during the April MPC meeting, as well as the conference of Poland's central bank NBP governor, it seems highly likely that there will be a proposal to adjust the restrictiveness of monetary policy to the current situation as early as May," Wnorowski told PAP Biznes.
"Whether the Council decides to do so, however, depends on what information and data we receive from the economy in April. I can imagine such grounds, which could induce the majority of the MPC to decide to cut rates, while I would like to stress that there are still a lot of threats to the persistence of inflation, so it is not a foregone conclusion," he added.
MPC's Wnorowski stressed that for the beginning, it is important for the cut to happen at all.
"For a start, it is crucial for a rate cut to happen at all, and I do not think it will be a step bigger than the standard 25 basis points," he assessed.
"Personally, I see the grounds that would allow May to support such a proposal with a high degree of calm and responsibility. As far as the next move is concerned, I would argue in favour of waiting for the July projection, as we have been stressing for a long time now that the July projection will be very important for deciding on rates," he added.
According to the MPC member, in the context of the interest rate decision, the next monthly CPI readings will be important, as well as data on the dynamics of consumption, which still remains the main driver of the Polish economy.
"After the January shot [of positive data in Poland's economy - MI ed.], February was more disappointing in this regard. As for March, I don't expect us to see a very good retail sales reading, because, among other reasons, this year Easter shopping will be done in April due to the layout of the calendar. At this point, this sluggish recovery is more likely to be a factor in favour of rate cut decisions," Wnorowski said.
"We also need to watch very carefully what happens next with core inflation, which recently surprised us very positively when it came in at the very top of the deviation band. But what is important is whether it will stay in this band for longer. There is also an ongoing threat in the form of growth in prices from the administrative-regulated category (...)," he added.
Wnorowski stressed that the MPC intends to adjust the restrictiveness of monetary policy, and not to loosen it.
"In terms of the scale of rate cuts throughout 2025, unfortunately I don't think we have much room for cuts here," the MPC member told PAP Biznes.
"The first three MPC meetings this year have been dominated by concerns about the persistence of inflation and, regardless of the change in the MPC's communication in early April after the last meeting; with fiscal policy so very loose, it is difficult to expect any significant easing of monetary policy," he added.
As he pointed out, the Council is communicating that it is considering adjusting its tightness to the current situation, but it is not communicating a shift to pursuing a loose monetary policy.
He stressed that the MPC has not found itself in a diametrically new reality without threats to inflation. In his view, these risks are as many as they were, only their scale is slightly smaller.
The MPC member pointed out that after the April meeting, the MPC is not forgetting the inflation target and is not saying that it will be less determined to pursue it.
Asked about the issue of the reserve requirement, Wnorowski said that this topic did not come up during the April meeting, although rather because the agenda included non-standard items that come up once a year, such as Poland's central bank NBP's financial check and the report on Poland's central bank NBP's activities.
"Personally, I do not think it is too early to discuss the reserve requirement level. I am convinced that this topic will be reflected in the Council's discussion in the not-too-distant future," Wnorowski assessed.
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