RPP's Tyrowicz: There are no indications that inflation is under control

There are no indications that inflation is under control, according to Monetary Policy Council (RPP) member Joanna Tyrowicz.

"We have no indications that inflation is under control in Poland. Instead, we have plenty of evidence that it is not under control in economies with lower inflation, in a downward phase and with inflation expectations anchored to the inflation target of these countries. The list starts with the euro area, the UK, Canada. Inflation in the US is similarly worryingly persistent, I write about them separately because they are in a higher-cycle phase," Tyrowicz wrote on her Linkedin account.

In her view, "the global economic downturn is, to some extent, systemic rather than cyclical and is related to the shift in consumption towards services and the energy transition".

"Monetary easing may increase employment at the expense of productivity, but neither effect is statistically strong. Instead, there is no effect on GDP," she concluded.

Yesterday, during a press conference, the President of the National Bank of Poland (NBP) and Chair of the RPP Adam Glapiński said that the 75bp cut in interest rates was a 'sharp adjustment' of their level; both inflation and economic activity are slowing faster than the central bank had expected, and further decisions by the central bank will depend on an assessment of the situation. Glapinski pointed out that forecasts unequivocally state that inflation will decline rapidly in the next quarters, on the day of the Council's decision it was in single digits, and for September it is likely to be slightly above 8.5% y/y.

The President of the NBP said at a press conference yesterday that "there are forecasts according to which inflation will reach the upper range of deviations from the central bank's inflation target (i.e. 3.5% y/y) in the second half of 2024", and according to the NBP's projections this will happen in 2025.

The RPP cut interest rates on Wednesday by 75 bps on the reference rate to 6%. The consensus of market expectations was a 25bp cut.

Source: RPP, NBP and ISBnews