Monetary Policy Council members differ about possible interest rate cuts

Two members of the Polish central bank’s rate-setting Monetary Policy Council (RPP) have expressed conflicting views on the possibility of interest rate cuts this year.

The contrasting views could muddy the waters over just which way the council could lean when it comes to setting rates.

"There will be no room for an interest rate cut this year," the RPP's Ludwik Kotecki told radio broadcaster TOK FM on Monday.

"I fear that it could also be the case next year," he added.

In Kotecki's opinion, inflation in May will likely come to around 13 percent.

In April, Poland's CPI stood at 14.7 percent year on year.

But his view has clashed with a fellow RPP member.

"Generally speaking, it is still possible to start cutting interest rates this year," Gabriela Maslowska told the Radio Maryja radio station.

According to Maslowska, inflation will continue to go down in the coming months and will drop to below 10 percent at the end of the year, and "this will open up the way to start a debate about the need to cut interest rates".

But Maslowska also said that it was too early to speak now about a concrete date. "The RPP must first be sure that inflation will be going down for a longer time and that inflation will be getting close to the national bank target of 2.5 percent.

At its last meeting in early May, the RPP decided to keep interest rates unchanged.

The reference interest rate remained at 6.75 percent, the lombard rate at 7.25 percent, the rediscount rate at 6.80 percent, and the discount rate at 6.85 percent. The RPP also left the deposit rate unchanged at 6.25 percent.

The RPP will hold its next meeting on June 5 and 6.