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The MPC is considering a rate hike. Wnorowski warns about inflation and a weaker złoty
The MPC is considering a rate hike as early as November
The Monetary Policy Council could return to interest rate hikes as early as November. MPC member Henryk Wnorowski said he is taking that scenario into account, and the NBP’s next projection is expected to help assess how strong the second-round inflation effects may be, meaning those that pass from one price increase to the next.
Wnorowski pointed out that CPI stood at 4,0 proc. in September, clearly above the upper end of the target band. In his view, this reading was driven mainly by energy prices, especially crude oil on global markets, which is a factor beyond the reach of monetary policy. At the same time, he added that at the beginning of October the prevailing approach was still to wait for new data and the projection.
According to the MPC member, the balance of risks for CPI is tilted to the upside. He pointed to a possible unanchoring of inflation expectations, meaning a situation in which households and companies begin to assume prices will keep rising permanently. He is also watching how effective fuel price cuts are, as this will determine whether CPI returns to the target range.
Wnorowski said that even such a return would not rule out a discussion about higher rates. In his view, in the current conditions the Council should show greater principle. NBP Governor Adam Glapiński said earlier that the MPC would be ready to raise rates as soon as November if the projection shows worrying and worsening inflation signals, although he himself is not saying that this will happen.
In Wnorowski’s view, at the beginning of October domestic factors were not clearly adding to inflationary pressure. He noted that in the third quarter GDP grew slightly below the July projection path, at 3,8 proc., and consumption was moderate. He also pointed to weakness on the investment side, where growth is being driven mainly by public spending and investment-related purchases abroad.
The MPC member added that wage growth had returned to around 5 proc. y/y, and wage pressure had eased. In his view, that provides some support for upcoming inflation readings. At the same time, he listed factors that could worsen the picture, including food prices, loose fiscal policy and the draft 2027 budget.
Finally, Wnorowski commented on the złoty’s weakness. He stressed that the MPC does not make decisions in order to influence the exchange rate, although it does monitor the market. In his view, the weaker position of the złoty stems, among other things, from the dollar’s strengthening against the euro and from the relatively lower attractiveness of interest rates in Poland after hikes in the US and the euro area. The MPC left the benchmark rate at 3,75 proc. in October for the seventh month in a row.
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