(Reporting by Pawel Florkiewicz, Alan Charlish, Anna Koper; Editing by Sharon Singleton)
pawel.florkiewicz.reuters.com@reuters.net)) (Writes through with details of the inflation report)
WARSAW, March 10 (Reuters) - Poland's central bank expects inflation to
return to its target range in 2025, according to its March inflation report,
reinforcing expectations that rates will stay on hold in the coming months.
The National Bank of Poland (NBP) has said that it expects a global economic
slowdown and falling commodity prices to help inflation return to its 1.5%-3.5%
target range, and on Thursday Governor Adam Glapinski said that he hoped that
falling inflation would allow rates to be cut in the fourth quarter of 2023.
"A gradual decline in inflation over the project horizon is supported by
the continued low level of aggregate demand in the economy, reduced cost
pressure in the labour market due to falling demand for labour and the rising
unemployment rate, as well as the assumed decline in global commodity prices,"
the report said.
The central bank forecasts inflation of 11.9% in 2023, 5.7% in 2024 and 3.5%
in 2025. It expects price growth to decline from the second quarter of 2023 and
reach 3.4% in the third quarter of 2025, according to the projection.
Polish inflation was 17.2% year-on-year in January, according to statistics
office data. On Thursday, Glapinski said he expected inflation would peak in
February at around 18.5% and would then fall to single digits at the turn of
August and September.
The NBP expects the Polish economy to avoid recession, but to post a marked
slowdown, with growth falling to 0.9% in 2023 from 4.9% in 2022.
"In 2023 the unfavourable impact of the marked slowdown in GDP growth in the
major developed economies on domestic economic activity will increase, and the
consequences of the current NBP interest rate hikes will also gradually
materialise," the bank said.
It expects GDP to fall 0.4% year on year in the first quarter of 2023 before
returning to growth in subsequent quarters.
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