Poland's central bank provided two sets of economic forecasts in its inflation report, one for a scenario in which anti-inflation measures are extended by the government and another in which they are not.

The National Bank of Poland (NBP) has taken a wait-and-see approach despite falling inflation due to factors including a lack of clarity on government policies on food VAT and regulated energy prices which have yet to be finalised, as well as the war in Ukraine and the situation in the Middle East.

The bank expects inflation to be 3.0% in 2024 and 3.4% in 2025 if zero VAT on food and measures to keep household energy prices down are extended. If they are not extended, it expects inflation to be 5.7% in 2024 and 3.5% in 2025.

It said the scenario in which the measures were extended was taken as being the more likely.

The NBP targets inflation of 2.5% plus or minus one percentage point.

"The future inflation path is highly dependent on the form of the government's future shielding measures which up to now have mitigated the effects of energy price rises on households and firms," the bank said.

"In the case of food prices, there is significant uncertainty about the horizon in which the zero VAT rate on staple food products will remain in force. For this reason, the March projection was prepared with two scenarios."

The NBP said that in the scenario where anti-inflation measures were maintained, a significant acceleration of economic growth was expected.


(Reporting by Alan Charlish, Anna Koper, editing by Ed Osmond)