(Bloomberg) -- Poland will likely cut interest rates at the start of the second quarter if forecasts show that inflation is set for a sustainable decline, according to policymaker Gabriela Maslowska.
Maslowska, who usually votes in line with the majority on the Monetary Policy Council led by central bank Governor Adam Glapinski, is another official who expects rate cut discussion to start early next year. In her previous public comments she cautiously envisaged lower rates in 2025, while in June she didn’t rule out tightening.
“If there are clear signs that inflation is permanently easing toward the target, then there is a basis for lowering interest rates,” she said in an interview. The cut itself will “most likely happen at the beginning of the second quarter,” Maslowska said.
She expects to see the benchmark, which has been at 5.75% for the last year, reduced by a total of 50 to 75 basis points next year. A full point cut over 2025 would be “a bit too risky,” Maslowska said.
“If the first cut is at the turn of the first and second quarters, then the next cuts should be expected in the second half of the year,” she said.
According to Maslowska, inflation may peak in March or April at 5.3% to 6.8%, depending on government decisions regarding the size of energy price caps and excise levies on tobacco products.
“Loose fiscal policy is not conducive to fighting inflation and is not conducive to lowering interest rates either,” she said. Next year’s fiscal deficit of 5.5% of economic output is “worrying,” she added.
Given the fiscal situation and general uncertainty about inflation, Maslowska wants to move cautiously.
“We all would like the rates to be reduced and we’d like to see this as soon as possible, to sustain economic growth,” she said. “But with the prospect of rising prices and uncertainties it would be a bit unreasonable to talk about significant reduction in rates.”
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