Inflation will peak at around 19% at the start of next year, but will fail to break the 20% barrier, says Adam Glapinski, governor of the National Bank of Poland (NBP).
He added that inflation, which rose to 17.9% in October, should start to fall in the second quarter of 2023.
Glapinski made the statement at a press conference on November 10, which followed the decision on November 9 by the Monetary Policy Council (RPP), the rate-setting body, to put all interest rates on hold in November.
He said that the decision was driven by a predicted drop in inflation from Q2 2023 onwards.
“Inflation may still rise in the coming months and will likely peak above 19% in January-February 2023 as a result of the trimming of the government’s anti-inflation shield by some 50%,” he told reporters.
But, he added, that “our analysis shows that the 20% level will not be broken” and that inflation “will markedly decline” from the second quarter of 2023.
Under the shield, VAT on food products was cut to 0% from the standard 5% rate, while VAT on fuels was reduced to 8% from the standard level of 23%. Last week, the government said it would withdraw some of the shield’s measures.
According to Glapinski, Poland’s inflation will turn single digit in 2023, with the end-year reading seen near 8%.
He also said that inflation would return to the NBP’s target rate of 2.5% plus/minus 1% in 2025.
Glapinski said that the RPP’s decision to put rates on hold was just a continuation of a pause in monetary policy tightening.
“We are not ending the tightening cycle,” he said, but added that “for now it is too early to discuss loosening.” (The First News/Business World Magazine)