Poland likely to leave rate untouched

Poland’s declining inflation isn’t likely to prompt central bank Governor Adam Glapinski to resume interest rate cuts, despite concerns that prices may rise later this year, according to Bloomberg.

The Monetary Policy Council is expected to keep the benchmark rate at 5.75 per cent for the fifth consecutive meeting. While Glapinski signaled no change in borrowing costs for the year, some officials remain open to cuts.

The March meeting, with its new forecast, was seen as a potential turning point, but uncertainty over government policies on food taxes and power prices has stalled action. Prime Minister Donald Tusk hinted at restoring a 5 per cent VAT on food.

Inflation, which peaked at 18.4 per cent in February 2023, has since decreased to 3.9 per cent as of January, nearing the central bank’s 2.5 per cent tolerance. Investors expect rate cuts of 0.5 per cent by year-end, contrary to Glapinski’s stance. He will address reporters on Thursday to manage expectations.

Glapinski, aligned with the nationalist Law & Justice party, faces scrutiny from Tusk’s administration, which accuses him of political bias. Tusk’s government plans to investigate Glapinski for potential financial misconduct, despite his denials. Lawmakers intend to summon him before a parliamentary committee by month-end.