Glapiński triumphantly announces: inflation is over. The conference of the president of NPB is underway
We are probably on an inflation target. We managed to achieve the goal – said Adam Glapiński and added that the publicists were wrong about inflation, but the National Bank of Poland “was right”.
– We would like to start this meeting with a gesture of joy. We are probably on an inflation target. We managed to reach our goal. We managed to bring the high inflation caused by the pandemic, global post-pandemic inflation, and Russian aggression in Ukraine to an end, said Adam Glapiński, president of the National Bank of Poland, at the beginning of the press conference.
Such a conference is traditionally held the day after the end of the meeting of the Monetary Policy Council and is devoted to explaining the reasons why the Council made the decision on interest rates. Yesterday, the Monetary Policy Council decided to leave rates at the current level.
Glapiński clearly triumphed. – The NBP was not wrong, unlike the publicists. We can colloquially say that we no longer have inflation in March, he said.
Why didn't the Monetary Policy Council lower interest rates?
Glapiński admitted that everyone is probably wondering why the Council did not lower rates in the face of falling inflation. He explained that Council members suspect that prices will start to rise again in the second half of the year, which will not be the result of monetary policy, but of the abolition of zero VAT on some food products. The zero rate has been in force since the beginning of 2022 and has been consistently extended. However, it is known that it cannot be maintained indefinitely, as it burdens the state budget.
– This uncertainty (regarding inflation – ed.) causes us to keep interest rates at the current level – explained Glapiński.
According to the economic model adopted by the National Bank of Poland, the return of VAT to 5%. will mean an increase in the inflation level by 0.9 percentage points. The president of the central bank pointed out that there are also other models, therefore some banks forecast an increase in inflation (due to the abolition of the zero VAT rate alone) by 1.2%.
According to Glapiński, a greater danger for inflation in 2024 will be the partial and gradual abolition of the shield covering electricity, gas and district heating. The government has not yet announced a timetable for abandoning it, but the Minister of Climate promised that she would ensure that there is no “shock” price increase. She also announced that protection will continue to be provided for farms requiring assistance, i.e. those that will not be able to cope with market prices of energy, gas and central heating. It is conservative to estimate that their prices will increase by 30% this year. compared to currently paid bills.
Glapiński admitted that in the absence of specific details, central bank analysts are unable to determine the impact of abandoning this element of the so-called solidarity shield against inflation.
The article is updated on an ongoing basis
