No interest cuts expected in H1 2024, despite inflation drop - BGK

Bank Gospodarstwa Krajowego (BGK) predicts a temporary dip in consumer inflation (CPI) in Q1 2024, below the 3.5% target, foreseeing potential interest rate cuts by up to 75 basis points in H2 2024, dependent on global economic conditions and actions by the European Central Bank (ECB) and Federal Reserve (Fed). The Monetary Policy Council (RPP) consensus leans towards balancing fiscal and monetary policies to avoid inflation risks.

BGK suggests a cautious approach, possibly delaying rate reductions in March. Despite a temporary CPI decline, BGK anticipates a rebound due to increased VAT on food and rising energy prices, projecting 3.6% CPI at 2024-end, followed by a gradual decrease to 3.1% in 2025.

Source: inwestycje.pl