The high level of core inflation in Poland rules out the possibility of interest rates being cut this year, analysts at a government think tank, the Polish Economic Institute (PIE), have said.
“The long period of high inflation also affects the activities of the NBP (National Bank of Poland),” PIE wrote. “We estimate that core inflation in the country will stand at around 10.2% on average in 2023, which precludes cuts in interest rates in Poland.”
PIE said a new inflationary threat in Europe was an escalation of wage demands in the EU’s main economies.
“Data from the European Central Bank (ECB) indicated that collectively negotiated wage growth was stable in the fourth quarter of 2022, standing at almost 3%,” the analysts wrote. “At the same time, those data were published very late and show more of a past picture, which disregards ongoing negotiations.”
PIE argued that data on internet searches presented an entirely different picture, as questions concerning pay rises had set new records in nearly all the main EU economies.
“The increase compared to the pre-pandemic years is often double,” PIE commented. “In such an environment, disinflation is very unlikely.” (PAP/Business World Magazine)
