Polish rate-setting officials split on rate cuts

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Polish rate-setting officials split on rate cuts

Two members of the RPP's rate-setting Monetary Policy Council have expressed differing views on the possibility of interest rate cuts this year.

The contrasting views could muddy the waters over just which way the council could lean when it comes to setting rates.

There will be no room for an interest rate cut this year, the RPP's Ludwik Kotecki told TOK FM on Monday.

I fear that it could also be the case next year, he said.

In Kotecki's opinion, inflation will likely rise to around 13 percent in May.

In April, the CPI in Poland sank to 14.7 percent year-on-year.

But his view has clashed with a fellow RPP member.

Generally speaking, it is still possible to start reducing interest rates this year, Maslowska told the Radio Maryja radio station.

In the future, inflation will continue to go down and drop to below 10 percent at the end of the year, Maslowska said, and this will open up the way to start a debate about the need to cut interest rates. The RPP must ensure that inflation will go down for a longer time and that inflation will be close to the national bank target of 2.5 percent.

At its last meeting in May, the RPP decided to keep interest rates the same.

The reference interest rate remained at 675 percent, the lombard rate at 7.25 percent, the rediscount rate at 6.80 percent, and the discount rate at 685 percent. The RPP also said the deposit rate was unchanged at 8.25 percent.