NBP Interest Rates Decreased by 75 Basis Points in September

The National Bank of Poland (NBP) has announced a 75 basis point decrease in interest rates for September. The decision was made in line with the central bank’s previous statement that the cut would be implemented if annual inflation fell below 10 percent. However, experts have raised concerns as the most recent official data indicates that inflation in Poland remains in double digits, reaching 10.1 percent in August.

Following the July meeting, the President of the NBP and the Chairman of the Monetary Policy Council (RPP), Adam Glapiński, informed the public that the Council had decided to conclude the cycle of interest rate hikes. The condition for initiating a cycle of rate cuts was a decrease in inflation to a single-digit level, below 10 percent.

Despite the ongoing double-digit inflation, the Monetary Policy Council made the decision to cut interest rates by a stronger-than-expected 75 basis points. The reference rate decreased from 6.75 percent to 6.00 percent.

During a press conference after the September meeting, Adam Glapiński assured that the conditions for rate cuts had been met. He stated that inflation in Poland had already fallen to a single-digit level, although he anticipated it to be slightly above 8.5 percent in September.

Preliminary data on inflation in September will be published by the Central Statistical Office on September 29th.

The announcement of the interest rate cut by the NBP’s press office has sparked reactions from market observers. Former Finance Minister Paweł Wojciechowski sarcastically commented, „We underestimate the sense of humor of the President and his angels.” Others have questioned whether the NBP’s press office understands the difference between the Consumer Price Index (CPI) and the Harmonized Index of Consumer Prices (HICP), as mentioned in their statement.

The HICP, which is a harmonized measure of consumer price inflation used by Eurostat, reported a year-on-year increase of 9.5 percent for August, compared to 10.3 percent in July. The HICP is used as a basis for assessing price stability according to the inflation criterion in the Maastricht Treaty.

In conclusion, the National Bank of Poland’s decision to lower interest rates has been met with skepticism due to the ongoing high inflation in the country. The discrepancy between the NBP’s statement and official data has raised concerns among experts. The impact of this rate cut on inflation and the overall economy remains to be seen.

Sources:
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