Poland to maintain firm interest rates amid concerns of sluggish economy

Despite a recent decrease in inflation, Poland’s central bank governor remains cautious that it could rise again due to higher food taxes and the potential removal of energy price limits. The central bank is expected to maintain its interest rates at 5.75% for the seventh consecutive meeting, according to a Bloomberg survey of economists.

Central Bank Governor Adam Glapinski has expressed reluctance to lower borrowing costs, citing concerns about potential inflation spikes as a result of recent tax changes and energy price adjustments. Poland’s annual inflation rate dropped to 1.9% in March, lower than market expectations of 2.2%, but the Monetary Policy Council (MPC) still sees significant uncertainty regarding inflation dynamics.

The MPC is closely monitoring the impact of fiscal and regulatory policies, as well as the pace of economic recovery and labor market conditions, on inflation. Finance Minister Andrzej Domanski has suggested that lower interest rates could benefit the budget and economy, but only a minority within the MPC supports rate cuts at this time. They are awaiting confirmation that the government’s energy pricing plans will not lead to a resurgence in inflation before considering further adjustments.