Polish Central Bank Governor Holds Interest Rates Steady as Food Tax and Energy Price Uncertainty Looms

Despite a recent fall in inflation rates, Poland’s central bank governor remains concerned about potential inflation reigniting due to higher food taxes and the potential removal of energy price limits. The central bank is expected to maintain its interest rate at 5.75% for the seventh consecutive meeting, as reported by a Bloomberg survey of economists.

In March, Poland’s annual inflation rate dropped to 1.9% from the previous month’s 2.8%, surpassing market expectations of 2.2%. However, the Monetary Policy Council (MPC) notes significant uncertainty surrounding inflation fluctuations, particularly driven by fiscal and regulatory policies, economic recovery pace, and labor market conditions in Poland. While Finance Minister Andrzej Domanski has suggested lower rates could benefit the economy and budget, only a minority within the MPC supports further rate cuts until the impact of government energy pricing plans on inflation is confirmed.

Central Bank Governor Adam Glapinski has expressed reluctance to cut borrowing costs, citing fears of inflation rising again. In an interview with Polish media outlet Rzeczpospolita, Glapinski said: “We need to be cautious in our actions because we are not yet certain whether these measures will lead to a sustainable reduction in prices or if they will simply result in temporary price fluctuations.” He added that he believes that while there is room for monetary policy action to support economic growth, it must be done carefully so as not to exacerbate inflationary pressures.