According to the central bank governor, interest rates in Poland could be slashed at the end of the year as policymakers leave the cost of borrowing unchanged.

For the fourth consecutive month, the country’s main interest rate remained at 6.75% this week, and December inflation was lower than forecast, resulting in the focus shifting to when the central bank could start loosening policy.

“As soon as possible, interest rates will be lowered,” said Adam Glapinski, president of the National Bank of Poland (NBP). “Will it be possible at the end of this year? I still hope so. Less than recently, but I do.”

Analysts surveyed by the Reuters news agency forecast stable interest rates until the end of the year.

According to the majority of the Monetary Policy Council (MPC), a predicted economic slowdown would work along with a total of 665 basis points of tightening in 2021 and 2022 to reduce inflation.

This stance appears to have been bolstered with a flash estimate from the statistics office revealing Poland’s inflation was 16.6% last month, under the 17.3% forecast in a Reuters poll.

The NBP governor added he forecast inflation to increase in January and February and subsequently decline.

“We expect that at the end of the year, as you see in the November projection, inflation will be in the single digits. I think there is 8% in the projection… but maybe it will be less than 8%,” he stated.

Glapinski said the 11 rate hikes that kicked off in 2021 were having a clear impact on the country’s economy.

“Our hikes, made gradually every month, are gradually having more and more influence on the economy towards tightening, towards limiting demand,” he stated.

That said, he added that the central bank had not yet officially ended the tightening cycle, signalling additional hikes could be made if required.