MPC member backs interest rates cut by 25 bp

Andrzej Bratkowski, a member of the Monetary Policy Council, announced that he will support the reduction of interest rates by 25 bp. Albeit Bratkowski was earlier calling to lower interest rates by 100 bp, he has changed his mind due to the new data on the industrial output and construction in December. Improving conditions in the sectors increase the possibility of slight growth acceleration. “The most probable GDP growth will be at 2.5-3.0 percent, therefore I do not expect coming out of deflation before the end of Q2, neither reaching the inflation target rate in 2015,” Bratkowski wrote on his blog. In his opinion, the GDP growth and inflation forecasts still leave room for further interest rates cut. Meanwhile, the strengthening of the Swiss franc increases market nervousness, which hinders the introduction of major changes. There is however no reason to defer the cuts, as the złoty exchange rate against the euro is more important for Polish economy than the one against the frank. “That is why I am in favor of small interest rates cut, by 25 bp,” Bratkowski added.