Zuber: The toughest battle against inflation is yet to come

The decline we are currently observing is 25%. the result of interest rate increases, but we still have a decline in the prices of raw materials and food products around the world – says economist Marek Zuber in an interview with the DoRzeczy.pl portal.

DoRzeczy.pl: PKO BP analysts predict that the Monetary Policy Council will cut rates by 25 bps this week with the risk of a move of 50 bps and 25 bps in November. How do you evaluate the possible decision?

Marek Zuber: The problem is that I have no idea what the Monetary Policy Council led by its Chairman, the Chairman of the NBP, Prof. Adam Glapinski. I have no idea what will happen because the MPC has become unpredictable. I remember President Glapiński’s statement a few months ago, a few days before the MPC meeting, in which he said that there would be no tariff increases, and yet the increase took place. Then the conference started after this meeting with President Glapiński’s statement: yes, we surprised the market and that was our goal. This makes absolutely no sense.

Why?

Because this is contrary to the principles that tell us in the civilized world about the relations of the central bank with the entire environment, that is, the economy. The central bank is supposed to be predictable. Another bad decision was cutting rates by 75 basis points. Most economists expected a cut of 25 basis points, not because we agree with this move, but because this is what Glapiński and the MPC members said. This is why the zloty weakened after this decision.

What do you think could happen?

A few months ago I predicted single digit inflation, assuming it would drop to 8-6%. The problem is that with such policies from the central bank and the Monetary Policy Council, we could be left with 5% inflation for a long time, and this is a dangerous phenomenon. In my opinion, the toughest battle against inflation still lies ahead of us. When President Glapiński says that “we have defeated inflation”, I say this is not true. Yes, inflation has fallen significantly due to the actions of the National Bank of Poland, but not only that. The decline we are currently observing is 25%. the result of interest rate increases, but we also have a decline in the prices of raw materials and food products around the world, and finally the fact that in Poland we had a year of negative real wages. These are the factors that contribute to inflation in Poland being one percent.

Source: Do Rzeczy

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