Pause in Polish interest rate hikes will continue, says c.banker Dabrowski

WARSAW (Reuters) – The current level of Polish interest rates is having a positive impact on the economy and the Monetary Policy Council’s (MPC) pause in policy tightening will continue, MPC member Ireneusz Dabrowski said.

Earlier this month the MPC left its main interest rate unchanged at 6.75% for the second month in a row, and National Bank of Poland (NBP) Governor Adam Glapinski said Poland’s rate hike cycle is paused but could continue.

“For the time being, we have a break in this tightening process and final decisions will depend on the incoming data. So we can’t say that we’ve definitely finished (rate hikes), but for now everything looks like this break will continue for a while,” Dabrowski told Reuters.

“In my personal opinion, the current level of interest rates affects the system so well that this pause will continue for now. Of course, there may be another shock at any time,” added the MPC member.

Dabrowski said that based on current data it is not possible to determine how long the Council will decide to leave interest rates at the current level.

The new central bank inflation projection shows that inflation in Poland will not return to the NBP target range, 1.5%-3.5%, until the third quarter of 2025.

“In my opinion, it will be faster than in 2025. I believe that 2025 is a ‘less optimistic’ scenario,” Dabrowski said.

“The path of inflation will be downward. The peak of inflation will be at the beginning of next year, but I think it will be around 19%, in line with the projection. I think this projection is realistic,” added the MPC member.

Inflation in October 2022 amounted to 17.9%, the statistics office reported.

(Reporting by Pawel Florkiewicz; Editing by Toby Chopra)