Biznes Fakty
Adam Glapiński on when inflation will fall. „Quite a distant horizon”
In the medium term, projections suggest optimism that with the current interest rates set by the National Bank of Poland, inflation will decrease by 2026. Furthermore, by 2027, it is expected to align with the inflation target, stated Adam Glapiński, President of the National Bank of Poland (NBP), during a press briefing. – However, let’s acknowledge that this is quite a distant outlook – he stressed.
The President of the National Bank of Poland indicated that by the end of the year, inflation might be comparable to that of 2024, projecting around 5%.
Glapiński on inflation
The NBP President pointed out that in January 2024, inflation stood at 3.7 percent, while in January 2025, it climbed to 5.3 percent. – In the first quarter of 2024, inflation was within the target range but then surged. Over the last few quarters, inflation has more than doubled, currently standing at twice the inflation target – observed the central bank’s leader. Glapiński stressed that the NBP is mandated by law to implement policies that bring inflation levels closer to the target. – We must take every measure to reach the 2.5 percent target in the medium term. Once this goal is met, we can focus on the second goal, which is to support the nation’s development policies – he remarked. The central bank’s head noted that the present inflation level is the highest seen in over 20 years, excluding the pandemic period and the energy crisis stemming from Russian aggression against Ukraine. – The high inflation rate is primarily driven by regulatory and fiscal factors. In recent months and quarters, energy costs have escalated significantly, and the VAT on food has also been raised. There have been hikes in excise taxes on alcoholic drinks and tobacco. Additionally, inflation is being fueled by increases in administered prices for water, as well as a rise in gas prices starting January 2025 – Glapiński detailed.
Forecasts
The NBP President added that based on the central bank’s forecasts, inflation this year „will not consistently decrease towards the inflation target.” On average, it is expected to be higher than in 2024 – he stated. According to the new inflation projections, inflation will drop to 4.1% in the third quarter, but this will be attributed to statistical effects, and in the fourth quarter of this year, there will be another inflation increase due to rising electricity prices – Glapiński mentioned.
Interest rates
Glapiński stated that maintaining stable interest rates is currently essential for reducing inflation to the NBP’s target.
He also noted that the significant rise in inflation, along with robust wage growth, increased core inflation, and the ongoing economic recovery, do not warrant any basis for lowering rates.
During its meeting that concluded on Wednesday, the Monetary Policy Council decided to keep the National Bank of Poland’s interest rates unchanged. The NBP’s primary interest rate, the reference rate, remains at 5.75%.
The Lombard rate is held steady at 6.25 percent per annum, the deposit rate remains at 5.25 percent, the rediscount rate for bills of exchange is at 5.8 percent, and the discount rate is at 5.85 percent per annum.
The Monetary Policy Council last adjusted interest rates in October 2023, when they were reduced by 25 basis points to the present level.
