Polish central banker Kotecki says rate cut possible in first-half 2025
WARSAW, July 5 (Reuters) -The Polish central bank's Monetary Policy Council will consider cutting rates in the first half of 2025, while the latest projection signals inflation will return to target in 2026, MPC member Ludwik Kotecki said.
In July, Poland's central bank left its main interest rate on hold at 5.75% for the ninth month in a row, in line with expectations.
"Finally, the moment has come when I can say that the risk of having to raise rates has become negligible," Kotecki, who is perceived as a hawk in the Polish Monetary Policy Council, said in an interview with Reuters.
"At the moment, however, this impact is not visible either in the current inflation or in the projection. Therefore, this alarm should probably be canceled."
In his opinion there is no room for rate cuts this year, but a cut could be considered in the first half of 2025, with inflation now expected to fall into the target band of 1.5-3.5% by the first quarter of 2026, sooner than previous projections.
The inflation path included in the July projection is lower than forecast in the previous one, published in March.
"This means that we can probably actually count on the Council to take a very serious look at the possibility of lowering interest rates. This could probably happen already in the first, or at the latest in the second quarter of next year. However, I would not count on radical changes in these rates," Kotecki said.
The easing of monetary policy should be approached very carefully and done in "small steps", he said.
"We cannot surprise the market, but simply prepare it for a few small cuts of 25 points next year. Today, however, it is too early for such a discussion."
His comments contrast with those from Poland's central bank governor, who said on Thursday that interest rate cuts would not happen before 2026 as inflation is expected to accelerate in the coming months.
In June, inflation was 2.6% and it is expected to accelerate in the second half of the year and, according to Kotecki, andmay exceed 5% by the end 2024.
Reporting by Pawel Florkiewicz; Editing by Kim Coghill and Sonali Paul
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