Only in the second half of the year can we count on inflation to let go: economist

Last Tuesday, the Monetary Policy Council (MPC) raised the reference interest rate by 50 bp, in line with expectations. However, interest rates remain strongly negative in real terms, as inflation probably exceeded 9% in January. According to Piotr Kuczyński, financial markets analyst from Dom Inwestycyjny Xelion, another hike in March is almost certain, but then we can expect a break. Much depends on the new members of the MPC because the composition of the Council will be replaced this year.

"This decision was expected, almost everyone assumed a rate hike of 50 basis points and here the Council did not surprise. Maybe it surprised a bit by raising the reserve requirement ratio for banks, which additionally strengthened the zloty. Unfortunately, this is not the end: 2.75% is still not enough. I think we will reach 3.25% There will be a stop there and the Council will see what will happen in the economy, what will happen with inflation," Piotr Kuczyński said.

"As Adam Glapiński, the President of the National Bank of Poland, says, but also Christine Lagarde, the head of the European Central Bank, this inflation at least in 50 percent, and I think, even more, comes from the outside. So it depends largely on what will happen in the oil, gas, and coal markets. So far the prices are going crazy there. I expect they will start to fall in the second half of the year, but we don't think we will see any relief before the middle of the year," he added.

(Newseria)