Governor Peter Kažimír: A Watched Pot Never Boils
We stand at a crucial crossroads marked by slowing inflation.
I stress that patience is essential before making pivotal decisions concerning the timing of the cut in our interest rates. Incoming data and the upcoming March update of our inflation projections will guide our decisions.
The peak of the tightening cycle is behind us.
The next move will be a cut and it is within our reach.
I am confident that the exact timing, whether in April or June, is secondary to the decision’s impact. The latter seems more probable, but I will not jump to premature conclusions on the timing.
As soon as it is warranted, we won’t hesitate to act.
We are not behind the curve; it’s more the case that the market has got ahead of events since December.
Acting hastily based on short-term surprises without having more clarity about the medium term would be risky. It could easily derail the progress we have made towards reaching our target.
We exercise patience in the name of stability, that’s what we need.
The global landscape remains riddled by uncertainties. We need to see if the early-year repricing delivers any surprises in the other direction. Wages agreements for the coming years are still an unpredictable factor too – a cat in the bag.
The risks of a premature cut, in my view, are much greater than those of acting a bit later.
One should always keep in mind, that we can act as swiftly and flexibly as necessary. I am confident in our capability and willingness to do so if needed.
In a nutshell – though the signs are good, we do not yet have enough information to make a confident conclusion.
For this reason, discussing the timing of an interest rate cut at this point is premature.
Our decisions will be driven by data and subjected to rigorous analysis. Patience, in this context, is more than a virtue; it’s the cornerstone of sound economic policy.
That’s desired and it will also be delivered.