The governor of Poland’s central bank dismissed short-term concerns about inflation, even though other central banks in the region have begun to raise interest rates in response to soaring prices.

Adam Glapinski said that the current data is not “worrying” and pointed out that inflation is partly driven by transient and external factors, such as the base effect and fuel prices. Poland’s inflation rate, currently the second highest in the EU, reached 4.7% in May and then slowed to 4.4% in June.

“When we subtract the impact of regulatory and supply-side factors from overall inflation, we arrive at an inflation rate close to 2.5%, which is the midpoint of our inflation target,” he told the Financial Times. “Therefore, there is no reason to panic right now, especially because we also expect headline inflation to fall.”

Inflation has Rebound In many countries, with the lifting of pandemic restrictions, some economists have called on the central bank to gradually reduce the stimulus measures taken during the crisis. The central banks of Hungary and the Czech Republic raised interest rates last month.

Grapinski said that as the economy accelerates after the pandemic blockade, the Polish central bank will “very carefully” observe signs that rising wages are pushing up prices. He predicts that the Polish economy will grow by more than 5% next year.

We are waiting for the economic recovery to become certain and solid, and then we will observe whether there is a risk of rising inflation

“If we see a trend where price increases in a few quarters may be driven by these demand-side factors, then we will take action. When will it happen? It’s hard to say exactly, but it won’t be earlier than this fall. Or maybe next year. Only half,” he said.

“Our approach is similar to that of the Fed or the European Central Bank: We are waiting for the economic recovery to become certain and solid, and then we will observe whether there is a risk of rising inflation. Of course we will not hesitate: we will act immediately if necessary. “

Some economists believe that with the signs of contraction in the Polish labor market, NBP should already be taking measures to curb inflation.The unemployment rate accounts for 3.8% of the labor force, which is Lowest in the EU, According to Eurostat.

“Our unemployment rate is very low, which puts pressure on wages. Most importantly, Polish transaction [a government programme of tax and spending pledges] Will boost demand,” said Alicja Defratyka, economist at ciekaweliczby.pl.

She added: “I think that by the end of this year, the inflation rate may be between 4.5% and 5%. If all the measures proposed in the Polish agreement take effect, the inflation rate may be even higher.”

Glapinski stated that NBP has no “any specific concerns” about the labor market, and that Inflow of workers From neighboring Ukraine and Belarus, “definitely enough to meet the growing labor demand in the next few years.”

“Of course, we are observing whether there will be any bottlenecks in the labor market, but at the moment we do not have any excessive pressure on wages. Wages are rising-but slower than labor productivity growth. Unit labor costs have not risen,” he said.

He added: “The worst thing that could happen is a spiral increase in wage prices, but this risk is very limited. We don’t have this, and we certainly won’t see it happen in the next few quarters at the moment. We don’t think it will happen next year. This happened.”

Economists also worry that ultra-loose monetary policy will fuel bubbles in the real estate and financial industries. However, Grapinski said that Polish banks are well-capitalized and the real estate market has not overheated.

“Currently, the real estate industry shows no signs of a bubble due to low interest rates. We don’t expect it,” he said.

“Remember that these low interest rates only exist for a relatively short time. According to market expectations, we will start to leave this field next year. The real estate cycle is much longer.”