Poland's central bank left its main interest rate on hold at 6.75% on Wednesday, as expected, maintaining its view that slowing growth will help curb inflation as price growth looks to have peaked. Glapinski said on Thursday discussing rate cuts was premature.
"We have high inflation, we are focused on fighting inflation ... when can it be considered? When we know that we are close, unambiguously in the process of reaching the inflation goal," he said. "At the end of the year, I would like it to be like this ... that it will be possible for us to start such a discussion." Inflation in Poland fell to 14.7% in April from 16.1% in March, according to a flash estimate from the statistics office, still well above the central bank's target of 1.5-3.5%. However, the decline from a peak of 18.4% in February has been faster than analysts forecast, leading some members of the Monetary Policy Council to say that rate cuts could be possible later this year. "By the end of the year, we expect (inflation) to fall, as I said, to the single-digit level... Everything indicates that at the end of the year we will be in the range between 7-9%...," Glapinski said. He added that he also expects a slowdown in core inflation, which in his opinion has just peaked. "In the following months and quarters it will decrease in line with the decreasing CPI inflation," he added. Despite inflation slowing, analysts still see no room for rate cuts this year. "If we are right about the inflation outlook (and we still see CPI near 10% at the year-end), there will be no room for starting monetary easing this year," Santander Bank Polska analysts wrote.
"It seems that the market pricing of interest rate cuts starting already this year was (again) premature and may start reversing."
(Reporting by Anna Koper, Alan Charlish, Pawel Florkiewicz
Editing by Christina Fincher and Susan Fenton)
