Polish inflation will return to target range in 2025, says c.bank

WARSAW, Nov 14 (Reuters) – Inflation in Poland will not return to the National Bank of Poland’s (NBP) target range until the third quarter of 2025, its latest projections said on Monday.

The NBP left its main interest rate unchanged this month, with Governor Adam Glapinski saying the bank wanted to gradually bring price growth back into the target range of 1.5-3.5% to avoid stifling the economy. ‘economy.

Glapinski has repeatedly pointed out that factors beyond the bank’s control — such as the war in Ukraine, rising commodity prices and the economic rebound from the COVID-19 pandemic — were responsible for inflation.

The bank said the withdrawal in 2023 of anti-inflation measures such as VAT cuts on fuel and gas would add 1.9 percentage points to inflation.

Prime Minister Mateusz Morawiecki said this month that measures to reduce VAT on gas and fuel would be replaced in 2023 by a new system that would force energy companies to shoulder the burden of reducing household bills.

According to the NBP’s latest gross domestic product (GDP) projections, the Polish economy will contract in the first quarter of 2023 but avoid the two consecutive quarters of contraction considered by many economists to be a recession.

On an annual basis, GDP growth is expected to slow to 0.7% in 2023 from 4.6% in 2022. He had previously forecast GDP growth of 1.4% in 2023.

“The downward revision of domestic economic growth in 2023 is a consequence of the stronger negative impact of Russian military aggression against Ukraine on economic developments in Poland and abroad,” the report said. .

Reporting by Pawel Florkiewicz Writing by Alan Charlish Editing by David Goodman

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