Poland should hold off on rate cuts – IMF’s Gottlieb

Poland should exercise caution before resuming interest rate cuts due to potential wage growth that could put upward pressure on prices, the IMF’s Geoff Gottlieb advised.

In an interview in Warsaw, Gottlieb highlighted that rising labour costs might lead companies to increase retail prices, potentially delaying efforts to manage inflation.

This advice reflects the National Bank of Poland’s cautious approach to monetary easing. Central Bank Governor Adam Glapinski has indicated that rate cuts are unlikely until 2026, citing concerns over price stability.

This stance has faced scrutiny from economists and market pressures.

Despite inflation easing within the central bank’s target range, Gottlieb supported Prime Minister Donald Tusk’s decision to end temporary inflation measures, including VAT restoration and partial energy price deregulation.

The IMF recommends Poland should develop policies for quick activation during future shocks and create a credible plan to reduce its budget deficit, which is projected at 5.3 per cent of GDP this year. Gottlieb also noted that increased defence spending should be balanced by savings to avoid unsustainable debt.

Attribution: Bloomberg