Central bank vice-chief: inflation to drop radically in 2023

According to a flash estimate released on Monday by Statistics Poland, consumer prices in October 2022 r., compared with the corresponding month of the previous year, increased by 17.9% (price index 117.9), and as related to the previous month increased by 1.8% (price index 101.8). 

During Thursday's session of the parliamentary Public Finance Committee, the National Bank of Poland First Deputy Governor Marta Kightley said that many central banks across were tightening their monetary policies in order to tackle the galloping inflation crisis. "In that regard, the Council's (Monetary Policy Council - edit.) tightening of Poland's monetary policy has to be assessed as significant," she added.

Kightley stressed that "since October last year the NBP interest rates have been increased 11 times, including the reference rate from the level of 0.10% up to 6.75%". "We can already see the effects of this tighter monetary policy on the credit market, and they will soon affect the whole economy."

She also said the economic situation was deteriorating at the same time in Poland and across the globe. Furthermore, Kightley argued, the initial inflationary shocks were gradually decreasing, as prices of some raw materials had ceased to rise so sharply, while tensions in supply chains had slightly decreased.

"Moreover, major central banks have been strongly tightening their policy, which will affect the global inflationary pressures. Overall, all these factors will work towards decreasing Poland's inflation in the coming years," she added.

According to NBP First Deputy Governor, it will most likely be a gradual process, as right now we are in the middle of shifting increased costs of companies onto the final prices of products.

"However, prices increase options will become limited along with decreased demand, and this will translate into slower prices dynamics," Marta Kightley said.

"Inflation, in line with our projection, and you will notice it ladies and gentleman, will be radically decreasing next year," she stressed.

"This inflation decrease next year will be a result of a few factors. First of all, tightening of monetary policy through increased interest rates. ... It's been already working very strongly, as you all know that granted loans, mortgages in September, there's 70% percent less of them than last year," Kightley said.