PAP Biznes he talked with Jerzy Kropiwnicki, a member of the Monetary Policy Council (MPC). In his opinion, inflation in our country will remain high next year. Interest rate hikes may prove necessary.
Kropiwnicki (MPC): rate hike may be necessary
Kropiwnicki believes that “In 2021, we will have to consider an interest rate hike, if not at the beginning, then certainly in the middle of the year.”
“The rates should gradually start to rise to the level of 1.50%, which has served the Polish economy well for several years. This is not only due to the threat of inflation. Interest rate cuts revealed some good effects, but also some negative ones “
– said Kropiwnicki.
In addition, he has no illusions: there will be a jump in inflation.
“When it comes to inflation phenomena, I predict that there will be a marked rise in prices in the extremely rare situation where the economy grows below its uptrend. It may happen that inflation throughout 2021 will be clearly above 2.5%. “
– he predicted.
Kropiwnicki believes that the deferred demand will have a big impact on inflation.
“Initially, the failure to meet the deferred demand could be explained by the fact that shopping malls were closed, so goods that require direct observation from some consumers, especially the older ones, were not purchased. Admittedly, younger consumers increased their online purchases, but this did not compensate for the entire decline in consumption. After the launch of shopping malls, we still do not see a strong rebound in sales, hence the conclusion that we are probably dealing with a precautionary retention of savings, whether on accounts or at home “
– He said.
Problems with the availability of goods
Another pro-inflationary factor, in his opinion, will be the shaping of supply chains after the pandemic.
“European countries will strive to achieve greater self-sufficiency when it comes to some products and semi-finished products, so we will be dealing with the inhibition of globalization processes or the effects of even deglobalization. I assume that it will concern medicines first. Expanding the pharmaceutical industry in Europe and strengthening its protection will be associated with higher costs. It is not known to what extent this process will affect the electronics and automotive industries, which, like in the case of drugs, largely depended on Chinese supplies “
– He said.