Poland’s Central Bank Governor Keeps Interest Rates High Amid Concerns over Food Taxes and Energy Price Adjustments

Despite recent concerns about inflation, Poland’s central bank governor Adam Glapinski remains cautious about lowering borrowing costs. He is worried about the potential impact of higher food taxes and the removal of energy price limits on inflation dynamics. As a result, the Monetary Policy Council (MPC) is likely to maintain its interest rates at 5.75% for the seventh consecutive meeting, according to a Bloomberg survey of economists.

The MPC closely monitors 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 waiting for confirmation that the government’s energy pricing plans will not lead to a resurgence in inflation before considering further adjustments.

In March, Poland’s annual inflation rate dropped to 1.9%, lower than market expectations of 2.2%. This was a welcome development for the MPC, which still sees significant uncertainty regarding inflation dynamics. The central bank remains cautious about borrowing costs and is hesitant to lower them until it is certain that inflationary pressures will subside for good.

Overall, while there may be some short-term benefits to lowering interest rates, Poland’s central bank governor Adam Glapinski remains committed to maintaining stability in the face of potential inflation spikes caused by recent tax changes and energy price adjustments. The Monetary Policy Council (MPC) is closely monitoring these developments and will continue to make informed decisions based on current data and market conditions.