(Bloomberg) -- Polish inflation flared up in July on the back of rising electricity and gas prices, bolstering the case that any monetary easing will have to wait until next year or longer.
The inflation rate rose to a 2024 high of 4.2% in July from a year earlier, compared with 2.6% in June, according to data released on Wednesday. The figure was below a median forecast of 4.4% in a Bloomberg survey of 24 economists.
Monetary Policy Council member Henryk Wnorowski told Biznes24 television after the data was released that inflation won’t exceed 5% this year and that the panel wouldn’t discuss lowering borrowing costs until the second quarter of 2025.
Central bank policymakers have long said that price growth would accelerate in the second half of the year as the government partly phased out caps on energy prices. Governor Adam Glapinski has also said that interest rates may remain unchanged until 2026 due to declining but lingering inflation pressures.
ING Bank Slaski SA economists expect the central bank to maintain its hawkish rhetoric in a “high inflation environment, and any discussion of monetary easing will not begin until after inflation has passed its peak” in the second quarter of next year, they wrote in an emailed comment.
The zloty traded 0.1% weaker against the euro following the release, while yields on two-year government notes fell 2 basis points to 5.01%, declining for the seventh time in eight days.
The central bank’s latest forecasts show inflation peaking at 6.3% in the first quarter of 2025 and then gradually slowing to target at the end of 2026. The MPC’s medium-term goal is to keep inflation within its tolerance range of 1.5% and 3.5%. The panel will hold its next policy meeting in September.
--With assistance from Barbara Sladkowska.
(Updates with details and comments starting from the first paragraph.)
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