Poland's inflation to fall from Q2 2023 says central bank head

Inflation will peak at around 19 percent at the start of next year, but will fail to break the 20-percent barrier, said Adam Glapiński, governor of the National Bank of Poland (NBP).

He added that inflation, which rose to 17.9 percent in October, should start to fall in the second quarter of 2023.

Glapiński made the statement at a press conference on Thursday, which followed the decision on Wednesday by the Monetary Policy Council (RPP), the rate-setting body, to put all interest rates on hold in November.

He said that the decision was driven by a predicted drop in inflation from Q2 2023 onwards.

"Inflation may still rise in the coming months and will likely peak above 19 percent in January-February 2023 as a result of the trimming of the government's anti-inflation shield by some 50 percent," he told reporters.

But, he added, that "our analysis shows that the 20-percent level will not be broken" and that inflation "will markedly decline" from the second quarter.

Under the shield, VAT on food products was cut to zero percent from the standard 5-percent rate, while VAT on fuels was reduced to 8 percent from the standard level of 23 percent. Earlier this week, the government said it would withdraw some of the shield's measures.

According to Glapiński, Poland's inflation will turn single digit in 2023, with the end-year reading seen near 8 percent.

He also said that inflation will return to the NBP's target rate of 2.5 percent plus/minus one percentage point in 2025.

Glapiński said that the RPP's decision to put rates on hold is just a continuation of a pause in monetary policy tightening.

"We are not ending the tightening cycle," he said, but added that "for now it is too early to discuss loosening."