Poland’s Central Bank Chief Throws Easing Expectations Into 2026

(Bloomberg) -- Poland’s central bank chief hardened his stance on inflation, saying policymakers are unlikely to deliver an interest-rate cut until 2026 as they anticipate a return to price increases.

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Governor Adam Glapinski has insisted that a jump in inflation driven by a government decision to partially lift energy price caps effectively rules out a reduction in the benchmark rate this year. As of June, he’d expressed hope that borrowing costs could fall in mid-2025.

But Glapinski threw that forecast forward by months on Thursday, in comments that will likely take on significance in Warsaw as Prime Minister Donald Tusk’s government accuses the governor of playing politics.

“We can forget about cutting interest rates when inflation rate goes up significantly,” Glapinski told reporters. “Such a possibility may not arise until 2026 at the earliest, once inflation begins to fall.”

An ally of the nationalist ruling party that Tusk ousted from power last year, Glapinski faces a probe into allegations into irregularities over bond purchases and other wrongdoing. He has consistently denied the accusations.

Even as inflation has slid to within the National Bank of Poland’s tolerance range for five months and regularly slips below expectations, the central bank predicts that the government measures will help push the consumer-price index to around 5% by the end of this year.

Glapinski was embroiled in accusations of political decision-making last year, when he oversaw two rate cuts ahead of the crucial October election, including an unexpected 75 basis-point reduction that blindsided markets.

“It’s difficult to dismiss the notion when listening to Governor Glapinski and taking into account two rate cuts ahead of last year’s general elections that his preference to keep interest rates unchanged until 2026 is motivated by politics,” said Piotr Matys, a strategist at InTouch Capital Markets.

Poland will hold a presidential election next year, a contest that will determine who succeeds President Andrzej Duda, an ally of the nationalist Law & Justice party who will end his second and final term.

“The message from the governor has once again sharpened, killing expectations of rate cuts not only in 2024, but also in 2025,” Piotr Bielski, an economist at Santander Bank Polska, wrote in a note. “We are still not giving up on the thesis that rate cuts could occur in the third quarter of 2025, if economic conditions and incoming data allow it.”

--With assistance from Konrad Krasuski, Piotr Bujnicki and Maciej Martewicz.

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