War dictates terms? “We must forget about further interest rate cuts while the conflict lasts”

Poland will probably refrain from cutting rates until the conflict in Iran ends, said Henryk Wnorowski, MPC member, in an interview for Bloomberg.

“We must definitely forget about further interest rate cuts while the war lasts. The end of the war will again open the possibility of returning to the discussion about reductions,” Wnorowski said.

This week, the Monetary Policy Council decided to cut rates by 25 bp.

According to him, the longer the war lasts, the more difficult it will be to assess its impact on inflation and the Polish economy.

He added that this week's cut was partly based on concerns that leaving them unchanged would send another worrying signal to financial markets.

“As for the target rate for 2026, the probability that it will reach the level of 3.25-3.5%, which was recently reported in the media, has dropped dramatically,” Wnorowski said.

Wnorowski said the surge in the global energy crisis could spur inflation above the central bank's target, meaning policymakers must remain cautious and cannot rule out any scenario, including a rise in interest rates.

“The wait-and-see attitude is more justified now than in previous months,” he said. (PAP Business)

map/