Poland's Monetary Policy: Navigating Interest Rate Cuts Amidst Economic Challenges
The Polish Monetary Policy Council (MPC) is considering further interest rate cuts this year, amidst economic uncertainties. MPC member Henryk Wnorowski notes that loose fiscal policy, high spending, and inflationary pressures remain key challenges. The upcoming September inflation reading will be critical in shaping future rate decisions.
Poland's Monetary Policy Council (MPC) is weighing the possibility of additional interest rate cuts this year, despite the complicated economic landscape. Recent remarks by MPC member Henryk Wnorowski highlight the caution required due to ongoing disinflation obstacles.
The National Bank of Poland's recent decision to reduce the main rate to 4.75% has been influenced by concerns over governmental fiscal policies and a robust economic growth trajectory. As Wnorowski explained, fiscal looseness and escalating expenditure are significant uncertainties impeding fiscal consolidation efforts.
Recent fiscal forecasts project Poland's budget deficit at 6.9% of GDP by 2025, one of the highest in the EU. Furthermore, the Fitch Agency's revision of Poland's outlook to 'negative' introduces additional speculation over the fiscal path. The forthcoming inflation data for September will be pivotal in guiding the MPC's cautious approach to rate adjustments.
(With inputs from agencies.)
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