Interest rates in Iran's crossfire. Kotecki, MPC: The space is much smaller

Room for further interest rate cuts. is much smaller after the outbreak of the war in Iran than it was last week – said MPC member Ludwik Kotecki on TOK FM radio.

“(Does the war in Iran – PAP) rule out (further rate cuts – PAP) is too far to say, but in my opinion the space has decreased at this point. We were talking last week before the attack that this space was 25 bp, probably easily 50 bp. (…) We had a difficult discussion, we thought about it for a long time whether this was the moment (to cut rates – PAP), but we also did not want to add uncertainty. I think almost everyone announced that a reduction will take place, it should actually take place in February, but we wanted to see the projection. It is very optimistic (…) and we made this decision. However, (…) this space (for cutting rates – PAP) may actually be much smaller here than last week,” Kotecki said.

The Monetary Policy Council lowered rates by 25 basis points on Wednesday, including the reference rate to 3.75%.

The central path in the March NBP projection assumes CPI in 2026 at 2.3%, in 2027 at 2.4%, and in 2028 at 2.3%.

NBP President A. Glapiński said on Thursday that the calming of the situation in the Middle East within two months means a return to previous scenarios of rate cuts, but the Council is currently not announcing any further decisions due to the deterioration of the inflation outlook due to geopolitics. (PAP Business)

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