According to the latest forecasts of Finance Minister Andrzej Domański, consumer inflation in Poland will scope around 5% y/y by the end of 2024, but for the next 3 years it will gradually decrease. Domanski, in an interview with RMF FM, pointed out that a disinflation process was expected to begin in 2025 and last until 2027.
Forecasts for inflation
"Inflation will grow somewhat by the end of the year, after which we anticipate it to gradually descend throughout 2025 and 2026, as in 2027. So at the moment, we have a slight emergence in inflation, most likely to about 5%, and then the process of disinflation, inflation going down. And I think inflation will be unchangeable at these lower levels for at least 3 years," the Minister explained.
These optimistic forecasts, though they presume further inflation increases in 2024, indicate affirmative prospects for the future, with lower and unchangeable inflation by 2027. The Minister pointed out that the current growth is only temporary and is due to short-term factors that should expire in the coming years.
Interest rate simplification area
Domański besides referred to the anticipation of lowering interest rates, which are presently among the highest in Europe. "The interest rates in Poland are surely high, they are the only highest in all Europe," said the minister. He pointed out that marketplace analysts expected the Monetary Policy Council (PRP) to decide to reduce interest rates by at least 100 basis points, or possibly even 150 bp in the coming months.
Inflation according to the president of the NBP
Yesterday, the president of the National Bank of Poland (NBP) and the president of the National Bank of Poland, Adam Glapiński, confirmed during the press conference that consumer inflation would stay at 4.5-5% y/y by the end of 2024, and the increased level could proceed until the mediate of 2025. Glapinski's long-term forecast implies a return of inflation to the NBP mark of 2.5% +/- 1 percent point, in 2026.
According to the Central Statistical Office (GUS), consumer inflation was 4.9% y/y in September 2024. Glapiński besides pointed out that after the March inflation projection of the RPP may consider a discussion on interest rate reductions if inflation stabilises, even at a advanced level. He added that there was a anticipation that inflation would start to decline earlier than expected, which could velocity up decisions on possible interest rate reductions.
Interest rate outlook
The Monetary Policy Council presently maintains interest rates unchanged, with a main mention rate of 5.75%. In September and October 2023, the RPP reduced its rates by a full of 100 basis points. These decisions were driven by an effort to combat inflation and to adapt monetary policy to the changing economical situation of the country.
Will Poland return to low inflation?
The current forecasts of the government and the National Bank of Poland propose that inflation in Poland, although inactive expanding by the end of the year, should gradually decrease in the coming years. economical stabilisation and possible interest rate cuts can contribute to a sustained fall in inflation, although any external risks remain.
Future decisions of the Monetary Policy Council will be crucial for the further improvement of the economical situation of the country, especially for the level of inflation and interest rates which have a direct impact on loans and savings of Poles.
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Domański: Inflation will grow by the end of the year
