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Interest rates. MPC member Ludwik Kotecki: further cuts possible
The interest rate reduction in July might signal the start of a trend toward loosening monetary policy, according to Monetary Policy Council member Ludwik Kotecki in a discussion with Bloomberg. He believes that if the macroeconomic indicators permit, it is feasible to implement two additional interest rate cuts by the end of 2025.
Kotecki suggested that the trend initiated by the July rate reduction could persist into September or October, and potentially continue into the following year, „based on forthcoming data and other insights.”
Ludwik Kotecki on inflation
According to the MPC member, the Council „demonstrated its capability to act with flexibility, responding promptly to data emerging from the economy”.
– Inflation is likely to dip below 3 percent permanently in July – stated the MPC member in an interview with Bloomberg.
Read more: „Let's not deceive ourselves.” Reflections on interest rate decisions
Kotecki: I perceive potential for two reductions
Kotecki highlighted the deceleration of wage growth in May and a lower-than-anticipated PMI reading in June as additional justifications for a rate cut in July.
„If subsequent data corroborates what we are presently observing, that inflation is set to decrease alongside modest economic growth, I personally still see an opportunity for two 25 basis point rate cuts this year,” Kotecki remarked.
The Monetary Policy Council, during its session on 1-2 July 2025, unexpectedly reduced all NBP interest rates by 25 basis points, with the reference rate now at 5.00%.
