It seems that in the conditions of freezing energy and gas prices in the first months of next year, inflation may be lower than the projection of the National Bank of Poland (NBP) forecasted in November, said the first vice president of the NBP, Marta Kightley, in the Sejm.
The Parliamentary Committee on Public Finance familiarized itself with the ‘Monetary Policy Assumptions for 2024.’ During the committee’s deliberations, the first vice president of the National Bank of Poland, Marta Kightley, reminded that as part of the fight against inflation, the NBP raised the main interest rate from October 2021 to September 2022 by 6.65 percentage points, which was the largest increase in the history of the Monetary Policy Council since 1998.
“The strong tightening of monetary policy contributed to the rapid decline in inflation that we see this year,” said Marta Kightley. “From the peak in February, the inflation rate has dropped by almost 12 percentage points, significantly, by 5 basis points, and core inflation has also decreased.”
She noted that there is a revival in the Polish economy, but despite this, demand pressure will be low, which, along with a weak economic climate and a decline in inflationary pressure abroad, “will contribute to further inflation decline.”
“In 2024, inflation is expected to be significantly lower than this year’s. The NBP takes into account that changes in the annual dynamics of prices over the next year may be determined by fiscal and regulatory factors, such as possible changes in energy prices and VAT,” said the NBP vice president. “Currently, it seems that in the conditions of freezing energy and gas prices in the first months of next year, inflation may be lower than forecasted in the November projection of the NBP,” she pointed out.
According to Kightley, in the further period, the level of inflation will depend on the pace of economic recovery and fiscal and regulatory factors.
“According to the November projection, inflation will be on target by the end of 2025,” said Marta Kightley. The NBP’s inflation target is 2.5 percent plus/minus 1 percentage point.”