March 31 (Reuters) - Headline inflation in Poland slowed
to a rate of 16.2% year-on-year in March, falling from a likely
peak but not as fast as expected, according to preliminary data
on Friday which sent another signal that monetary policy should
stay tight for some time.
Policymakers across central Europe are counting on a gradual
slowdown in price growth in the first half of 2022 before a
sharper drop later this year, and are guiding steady interest
rates for now.
Polish prices rose 1.1% on the month in March.
Inflation had hit 18.4% year-on-year in February, which
economists see as a likely peak in the price surge of the past
two years. Food prices have grown strongly in that time, cutting
into household budgets.
While a tight labour market has led to double-digit wage
growth in emerging Europe's largest economy, pay has not kept up
with inflation.
"(The) data once again undermine opinions that inflation
will fall faster than assumed in the central bank projection,"
Santander Bank Polska economist Piotr Bielski said.
"This is another signal that interest rate cuts this year
are unlikely."
Markets are turned to a Polish rate setting next week at
which the bank is likely to keep its base rate at 6.75%,
following a sharp hiking cycle in 2021-22.
The Czech and Hungarian central banks this week pushed back
against expectations of steep rate cuts later this year.
Some Polish rate setters have also signalled no quick rate
cuts even as the economy slows sharply amid high inflation.
Central banker Ireneusz Dabrowski told state-run news agency
PAP on Tuesday there would be no hasty lowering of interest
rates, while the International Monetary Fund a week ago said the
central bank should be ready to hike rates if needed, saying
loose fiscal policy might harm the fight to bring down
inflation.
(Reporting by Jason Hovet in Prague and Anna Wlodarczak-Semczuk
in Warsaw
Editing by Peter Graff)
