Polish c.banker Litwiniuk: total of 100-125 bps of cuts possible this year
However, he said that due to certain risks regarding the path of disinflation the MPC needs to be cautious.
The central bank left its main interest rate unchanged at 5.25% on Wednesday, as expected, saying that the current level was conducive to achieving its inflation target.
"A different decision could suggest that we are in a cycle of cuts. However, due to certain risks that accompanied the formation of the disinflation path, we should approach this issue with caution," Litwiniuk said.
"This does not mean that the Council will not return in July or September to the decision to lower interest rates."
Among the uncertainty factors, Litwiniuk mentioned wage dynamics, which remain high and pose a "significant risk" to price stability. He also mentioned the development of energy prices at the end of this year and the risks associated with the government's loose fiscal policy.
"I believe that the scenario of cutting interest rates in 2025 by a total of 100-125 basis points remains valid, but its hasty implementation could create risks at the end of the impact horizon, i.e. next year, when we would like to see inflation at the (inflation) target," the MPC member said.
In May, the National Bank of Poland cut its benchmark rate by 50 basis points, in its first monetary easing since October 2023.
Inflation slowed down to 4.1% in May, but remained outside of the central bank's inflation target range between 1.5% and 3.5%.
The Governor of the National Bank of Poland (NBP) Adam Glapinski said on Thursday that the bank will not commit to a future path for interest rates for now because of economic uncertainty.
Ludwik Kotecki, another member of the Monetary Policy Council, told Bloomberg that he still supports cutting rates in July or September and that a total of 50 basis points of additional easing this year would be "optimal".
However, he added that he was not sure whether the MPC would find a majority to support such a scenario, and that central bankers were more cautious due to growing political instability and concern over a bloated budget.
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