Wnorowski from the Monetary Policy Council does not rule out adjusting interest rates in September

MPC member Henryk Wnorowski does not rule out another adjustment of interest rates in September, and at the end of 2025 he sees the main rate "with four at the front". He points out that the persistence of inflation and loose fiscal policy speak against a quick and deep reduction of rates. In his opinion, the adjustments should be in steps of 25 basis points.

"I do not rule out another rate adjustment in September, but we should remember and emphasize the need for caution in monetary policy. The main argument against a rapid and deep rate cut is still the threat of persistent inflation. I would like to remind you that the June CPI reading of 4.1 percent is the worst result in the entire European Union. However, in my opinion, the most important argument against rapid and significant cuts is a very loose fiscal policy. The budget for next year, which we will know in September, will be key in this respect," Wnorowski told PAP Biznes.

"As for the path of interest rates, I would not rule out various scenarios in the perspective of the end of the year - with the reservation that there are many factors of uncertainty. So far, I have said that at the end of 2025 I see the reference rate "with four at the front", so one more adjustment of 25 basis points will be enough and this condition will be met. If there were several such adjustments - there will also be "four at the front". However, I do not see a large number of movements, I would not gain much momentum," he added.

The Monetary Policy Council at its meeting on 1-2 July 2025 unexpectedly lowered all NBP interest rates by 25 basis points, the reference rate currently stands at 5.00%.

NBP President Adam Glapiński announced at a press conference on Thursday that a rate cut is possible in September if the circumstances are favorable, but the Monetary Policy Council is not announcing a easing cycle. He noted that when the Council adjusts rates, it will wait at least a month with the next move. He added that if inflation permanently falls to the target, the reference rate could ultimately go down to 3 percent.

According to Wnorowski, if the MPC continues adjustments, they should be made in steps of 25 basis points, not larger.

"And these rate adjustments may still take some time. Perhaps until the issue of the energy shield is finally resolved, because we still don't know exactly what will happen with it. Supposedly, a price freeze is announced until the end of the year, but the legislative process is ongoing, so we cannot be certain in what form it will come into effect," he notes.

In Wnorowski's opinion, the Monetary Policy Council does not formally announce a cycle of interest rate cuts because monetary policy should, above all, be prudent and inflation cannot be allowed to persist at an elevated level.

It indicates that factors that could potentially sustain higher inflation have not been completely neutralized and may yet return.

“This is absolutely unacceptable, so restrictive policies are still needed,” he stressed.

"It may sound strange that we are aware of the need for tightening, but we are making a small adjustment. We did it because we can be sure of reaching the inflation target in July, and the growth prospects are slightly worse than previously expected," he added.

In this context, Wnorowski pointed out that the Monetary Policy Council does not forget about the second leg of its mandate, i.e. supporting growth.

"Although this is not the most important issue now, we can see that Poles are not consuming as much as previously expected, and consumption is still the basic engine of the Polish economy. Of course, Europe envies our growth rate, but each subsequent projection or GDP forecast, also from other centers, is slightly lower than those at the beginning of the year," he said.

"Wages are not growing as some feared. Investments are not becoming as important a driver as it might seem. So far, it does not seem that the KPO has been a significant pro-development impulse. From the GDP perspective, this is not good news, but from the disinflation perspective, it is quite the opposite. That is why we were able to adjust interest rates for the second time this year in July," he added.

According to Wnorowski, consumption may be slightly higher than before in the coming months.

"That's good, because there's no other engine on the horizon that would significantly contribute to the development of the Polish economy. This also opened up space for further adjustments to interest rates," he added.

On the global economic side, Wnorowski is more relaxed about the impact of geopolitics on inflation in Poland.

"Recent experiences, including the wars in the Middle East, have confirmed in my opinion that the global economy has, in a sense, become accustomed to major turbulences in the geopolitical environment and no longer responds to them with such dramatic supply shocks as before," he said.

The MPC member informed that in July the MPC did not return to the issue of reserve requirement parameters and focused on the inflation and GDP projection.

In June, the Monetary Policy Council reviewed a study on mandatory reserve systems around the world.

Rafał Tuszyński (PAP Biznes)

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