Poland's inflation to start declining in Q3 says central bank head

Paweł Pawłowski/PAP

Inflation in Poland should start going down in the third quarter of this year, Adam Glapinski, governor of the National Bank of Poland (NBP), has told PAP.

"We'll see inflation peak in the third quarter of this year and it will be at about 16 percent (year on year - PAP), assuming that the government maintains its anti-inflation shield," Glapinski told PAP on Thursday.

The anti-inflation shield temporarily reduced taxes on fuels and basic foodstuffs to help households cope with rapidly rising prices.

If the shield is maintained and the NBP's assumptions hold throughout the forecast horizon, inflation will reach 5.5 percent in the last quarter of 2023 and 3.5 percent in the final quarter of 2024, Glapinski said.

Inflation reached 15.6 percent year on year in June, a level last seen in 1997. At its July sitting, the NBP's rate-setting body hiked the main interest rate to 6.5 percent from 6.0 percent.

PAP asked Glapinski if the central bank was planning any further rate increases.

"If the projection materialises... it will be possible to end the monetary tightening cycle quickly," the central bank governor said.

According to Glapinski, the first rate cuts will be possible in 2023, if GDP growth starts to falter.

"However, further decisions will depend on incoming information on the prospects for inflation and economic activity," he said.