“Thus we return from the fight against inflation, as the National Bank, but also as all Poles – with a shield. We managed to defeat this inflationary hydra and return to safe waters”, said Prof. Adam Glapiński, President of the National Bank of Poland, during a press conference dedicated to assessing the current economic situation.
As you know, yesterday the Monetary Policy Council decided to keep interest rates unchanged.
– emphasized Prof. Glapiński.
I would like to remind you that in the first half of this year we achieved great success as a central bank, but also as all Poles. After a very sharp increase in inflation caused by the pandemic and the outbreak of war – I repeat: caused by the pandemic and the outbreak of war – inflation fell to the inflation target.
– he added.
An incredible success that lasted a long time. Thus we returned from the fight against inflation, as the National Central Bank, but also as all Poles – with a shield. We managed to defeat this inflationary hydra and return to safe waters.
– he emphasized.
Prof. Glapiński: If it weren’t for the price increase, inflation would be consistent with the NBP target
This is a historic achievement for Poland, thanks to the National Bank of Poland, but also a historic achievement for Poland. Despite strong external shocks, the Polish Gross Domestic Product, our common wealth, produced every year is approximately 13% higher than before the pandemic. This is an exceptional achievement.
– indicated the president of the NBP.
Poland has an incredible growth dynamic. Thanks to the National Bank of Poland, it is balanced. We are not going from a wave of bankruptcies and unemployment to a wave of excessively fast growth, prosperity and hyperinflation. This is one of Poland’s greatest successes in recent decades.
– he added.
Although the inflationary threats related to the pandemic and war have already passed, let’s hope forever, although the war continues and the situation with Covid is also unclear, we face new challenges and decisions regarding monetary policy. it is still difficult and complicated
– emphasized Prof. Glapiński.
Already a few months before the holidays, we indicated that if energy prices were unfrozen, inflation would rise above the target. This was clear, as it follows from the econometric model. And indeed, in July the price level rose due to a 1.3% increase in energy prices.
– he said.
This was a factor independent of the NBP, beyond any control or influence of the NBP. As a result, the year-on-year price dynamics increased to 4.2 in July. In other words, if it were not for the energy price increases, inflation would still be in line with the NBP target. And in August, according to the provisional estimate of the Central Statistical Office, inflation amounted to 4.3.
– highlighted the President of the National Bank of Poland.
GDP growth
All countries, including highly developed and rich countries, suffer from persistent underlying inflation. This is a characteristic feature of inflationary processes in these times.
– said Prof. Adam Glapinski.
In the second quarter of this year, the GDP grew by 3.2%, with a strong increase in consumption. This is very good news from the point of view of the increase in prosperity of Poles, although for analysts it is “bittersweet”. We are pleased that growth is fast, but it also causes additional inflationary pressure. We want it to be as high as possible, but we must remember that the other side of the coin is higher inflation.
– he added.
Growth in the eurozone is very low and Germany has been on the brink of recession for a long time
– he pointed.
By the end of the year, inflation could exceed 5%.
Preliminary forecasts indicate that inflation at the end of this year could even exceed 5%. It will remain around 5%, but it could even exceed that level. Price dynamics may even increase
– he added.
There are some elements that are difficult to take into account, (…) certain price increases, water for example (…)
– Glapiński said during Thursday’s press conference.
He added that price dynamics may increase in early 2025, when protective measures expire. Glapiński also drew attention to the impact of the increase in excise duty on tobacco and alcohol products on inflation.
These increases will further increase inflation next year, in proportion to how these products contribute to the inflation basket.
– said the President of the National Bank of Poland.
He noted that inflation is expected to ease from the middle of next year.
We are counting on government announcements and statements from ministers. In 2026, when the effects of rising energy prices are absorbed by the economy, inflation will return to target.
– predicts Glapiński.
However, forecasts available to the National Bank of Poland show that inflation is expected to decline again from the middle of next year, but it has a chance of returning to the inflation target only in 2026. However, decisions on interest rate cuts are taken by the Monetary Policy Council and the decision to reduce them could be taken earlier.
– said the President of the National Bank of Poland.
He added that with inflation stable, the Monetary Policy Council will discuss lowering interest rates.
““Nothing is free in economics”
The decision of the Monetary Policy Council last autumn, which resulted in two rate cuts, came at a time when it was known that inflation was falling and would continue to fall, and fall very rapidly. The developments in the following months confirmed the correctness of this decision. Inflation continued to fall.
– said Prof. Adam Glapinski.
But how much ink and electronic communication was spilled that it was a political decision. Lying and demagogic arguments to justify something at all costs
– he assessed.
Inflation could turn out to be higher, more or less, if the economic recovery progresses more quickly. There is no such thing as a free lunch in economics. Milton Friedman said it, and Adam Smith said it before him. Incomes can rise very quickly, but when they rise too quickly, prices rise.
– he pointed.
We are very happy with the growth we have at the moment, but if it continues to grow, it will create some inflationary pressure. This is the first danger. But of course we want Poland to develop as quickly as possible.
– he added.
Polish economic miracle
All over the world – I was at Jackson Hall recently – everyone you talk to about Poland will talk about the Polish economic miracle. Poland has been experiencing extremely rapid economic growth for many, many years.
– emphasized Prof. Adam Glapinski.
Of course, there are countries where it is faster, for example, in South Korea. But remember: there you work much longer, much more intensely, there are no vacations, maternity benefits, parental benefits, etc.
– he added.
In Poland, as it is, it is good. But when I hear that a decision is being made to introduce a 4-day working week in Poland, I am sorry, but it is a bit early, because we are still the ones catching up. And if it is only for employees, it is clearly unfair. Those who work hard will have to work hard as before, and those who have so-called clean “white-collar” work – no? There are certain principles of social justice and sense of situation. Certainly not.
– he emphasized.
However, if everything continues as it is, in 10 years we will be at the current level of France or Great Britain. Is this an unambitious goal? Is the current level of France or Great Britain not a great prospect for young people or the middle generation? Yes, we need to maintain the pace of work, production and quality of management.
– added the president of the NBP.
jj/YT: Narodowy Bank Polski, PAP
