Inflation, interest rate hikes. Ludwik Kotecki, MPC member, forecasts

I’m afraid we’ll end up with twenty very tiny interest rate hikes. A better approach would be decisive increases earlier this year – said Ludwik Kotecki, member of the Monetary Policy Council on TVN24. He forecasted inflation to exceed 20 percent early next year, and not to fall below 10 percent by the end of 2024.

The Monetary Policy Council on Wednesday decided about raising the principal, benchmark interest rate by 25 basis points. The reference rate will rise from 6.50 to 6.75 percent. It was eleven o’clock an increase in interest rates in a row. Constantly rising interest rates translate into an increase in loan installments. At the same time – as reported by the Central Statistical Office – inflation in August 2022 it was 16.1 percent on a year-on-year basis.

Economist, MPC member Ludwik Kotecki talked about the interest rate hike and inflation on Monday in “Rozmowa Piaseckiego” on TVN24.

Ludwik Kotecki as a guest of “Piasecki’s ConversationTVN24

The program leader asked Kotecki to what level interest rates should rise in order to effectively fight inflation. – There is a measure of inflation like core inflation. She is now 10 percent. This is more or less the answer to where this interest rate should be in order to contain inflation effectively – replied the economist.

In his opinion “interest rate hikes are too small”. – We will continue to raise every month. We already have eleven raises, I’m afraid we’ll end up with even twenty, very tiny. It seems that decisive hikes earlier this year would be a better approach – said the member of the Monetary Policy Council.

Kotecki: two in front at the beginning of next year

– I am afraid that we will see further increases in inflation, a higher level this year, and certainly at the beginning of next year – said the TVN24 guest.

He also forecasted inflation to exceed 20 percent early next year. – Two at the beginning is probably at the beginning of next year. It should lower a little later. (…) Hyperinflation will not await us in the near term, because we are entering a very strong economic slowdown, the environment for this inflation to rise is limited – he added.

In Kotecki’s opinion, “unfortunately, we will not come down with inflation below 10 percent” by the end of 2024. – And 10 percent is still very high inflation – emphasized the guest of “Rozmowy Piasecki”.

He pointed out that “inflation will not go down by itself, we must forget about it”. – She has a tendency to self-wind. If it is left to itself, it goes to higher and higher levels. This is, unfortunately, still a realistic threat in Poland. According to the forecast of the European Commission, the highest inflation in the EU next year will be in Poland – he said.

Kotecki: there will be no investment at all in a moment

The economist explained that “inflation lowers economic growth”. – Such high inflation, above 5-6 percent, very quickly and definitely affects economic growth, especially the effectiveness of investments. There will be no such investments in a moment – he warned.

He noticed that “fuel prices already in July and August they lowered inflation. “- The increase (inflation) means that the domestic factors are starting to come to the fore. If all other factors were constant, inflation would fall thanks to the fall in fuel prices,” explained Ludwik Kotecki.

Main photo source: TVN24

Leave a Comment

Your email address will not be published.