Inflation is already past its peak, Polish central bank head says
Adam Glapinski, the governor of the National Bank of Poland (NBP), has said that inflation in Poland is set to decline as it has already reached its peak.
"All indications are that inflation has already passed its peak, although it is still elevated," Glapinski said at a press conference on Thursday, a day after the NBP's rate-setting body RPP cut the interest rates by 50 basis points after one and a half years of no-move policy.
The reference rate now stands at 5.25 percent, while the CPI inflation reached 4.2 percent in April, according to the latest flash reading by the statistical office GUS.
"In fuels we also see the effects of lower global oil prices as well as a strong zloty and a weak dollar... A strong zloty lowers the prices of diesel and petrol at our (petrol - PAP) stations," Glapinski said.
According to Glapinski, inflation should decrease to the upper limit of the NBP's target band of 2.5 percent plus/minus one percentage point in the third quarter.
"In the third quarter, the prices growth should decrease to the neighbourhood of 3.50 percent, close to the upper limit of deviation from the NBP's target," he said.
However, the central bank's fight against inflation is far from over, Glapinski said.
"A loose fiscal policy continues to be a pro-inflation factor in the Polish economy, and it is the main factor," he said. "Last year, the public deficit grew to 6.6 percent of GDP, it is a very high level, much higher than previous forecasts. Alongside Romania, the deficit in Poland is the highest in the whole of the EU."
He also said a change in Poland's interest rates at the RPP's next meeting in June is unlikely.
"I believe it's doubtful that we should risk that," he said. (PAP)
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