According to the Bank’s calculations, inflation will rise from the present 4.7% in August to 5% at the end of the year.

Prices will continue to rise at the beginning of 2025 and the inflation rate according to the bank’s economists, is not likely to be back within the target range of 2.5% +- 1 percentage point until 2026.

However, the governor said that there could be space for maneuver with the interest rates if inflation comes down in the first quarter of 2025.

One key concern for Glapiński was the energy subsidies, which were partially removed in July, causing a 13.4% increase in bills in that month’s inflation.

The cap on bills, which was put in place in January 2023, is due to be fully removed in January, according to the draft government plan budget.

“It is not our place to judge whether subventions are a good or a bad idea. However, if these subsidies are removed in January, it will have a knock-on effect for inflation,” Glapiński said, listing numerous prices affected, such as for services.

He added: “The government is looking for funding in order to keep the gas and electricity bill subsidies in place.”

“If there is no utilities price hike and inflation is lower than currently forecast, there may be room for a minimal cut – 0.25 percentage points. But that will not be the start of a series of cuts.”

Glapiński said that the domestic economy, which grew 3.2% in the second quarter of 2024, was praised as “the Polish economic miracle” by other central bankers at their annual get-together in Jackson Hole in August.

However, he said that the growth was dependent on domestic consumption, as exports to top markets like Germany were in poor shape.

And too much spending at home can lead to inflation, the governor warne