Goldman Sachs expects interest rate cuts in Poland amid strong złoty

Economists at Goldman Sachs foresee Poland’s central bank (RPP) cutting interest rates by 100 basis points by the end of 2024, with the first cut likely in Q3. The strong złoty, nearing 10-year highs, and the declining "super core" inflation (excluding regulated prices) create room for monetary easing. However, no rate cuts are expected before the presidential elections in mid-2024.

The złoty has gained 12% against the euro since 2022, exerting a disinflationary impact of approximately 0.2% over two years. CPI inflation is expected to drop significantly after April, with core inflation currently at 3-3.5%. The potential lifting of energy price caps later in the year is expected to have a limited inflationary effect.