Poland will likely keep borrowing costs unchanged as the threat of an economic recession overshadows concerns over the highest inflation in a quarter century.
(Bloomberg) — Poland will likely keep borrowing costs unchanged as the threat of an economic recession overshadows concerns over the highest inflation in a quarter century.
All 25 economists surveyed by Bloomberg anticipate that policy makers will keep Poland’s key interest rate on hold at 6.75% for the fourth straight month.
Central bank Governor Adam Glapinski calmed an increasingly public dispute within the rate-setting Monetary Policy Council late last year as his warnings over excessive tightening dovetailed with signs that risks from inflation were subsiding as the peak neared.
Consumer prices decelerated in November to 17.5% from a year earlier, but are expected to gain pace in the first quarter due to an increase in regulated prices. Inflation is set to peak in March or April, Premier Mateusz Morawiecki said on Monday.
“We do expect inflation to rise further in the first quarter to 20%, but this is broadly in line with the central bank’s projections and inflation should fall thereafter,” Nicholas Farr, an analyst at Capital Economics, said in a note. “As a result, we think further rate hikes are unlikely.”
Even as Glapinski has flagged the economic risks, policy makers haven’t officially ended the monetary tightening cycle that brought rates up from near zero in October 2021.
The governor will hold a news conference to explain the decision at 3 p.m. in Warsaw on Thursday.
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