UPDATE 2-Polish central bank may discuss rate cuts in early 2025, says governor

(Adds finance minister quotes in paragraphs 6-8)

By Karol Badohal

WARSAW, May 10 (Reuters) - Poland's central bank may consider rate cuts in early 2025, its governor said on Friday, after it held its main interest rate steady at 5.75% for a seventh consecutive month amid uncertainty about how much inflation will rise in coming quarters.

The National Bank of Poland (NBP) expects inflation to rise in the second half of 2024, largely due to the phasing out of zero VAT on food staples and a change in an energy price cap for households.

However, Governor Adam Glapinski said the scale of the increase remains uncertain and that policymakers will need to see inflation stabilise within the central bank's 1.5%-3.5% target range before they start talking about lowering the cost of credit.

"If, at the beginning of 2025 we see that we are in the target range or will soon be in the target range, such a discussion will take place," Glapinski told a news conference a day after the bank's latest policy meeting.

"I don't see any readiness to cut interest rates this year," he added.

Poland's finance minister Andrzej Domanski speaking to state-owned broadcaster TVP Info on Friday evening said, "if inflation goes up, it will really be only slightly."

"I expect that at the end of this year we will have inflation at about 4%, maybe 4.5% and then it will gradually decline again."

While declining to comment on NBP decisions, Domanski added "however, of course we know that interest rates in Poland are high and inflation is luckily low."

Poland's government raised the VAT on food staples to 5% from zero in April, rolling back a measure that had been designed to help households cope with soaring inflation.

The government will also raise a cap on power prices for households in the second half of the year.

Glapinski said the change in the energy price cap meant that inflation would likely be over 5% at the end of 2024.

The main risk factor for inflation was the fast pace of wage growth, he said, with corporate sector wages having risen 12% in March from a year earlier, according to statistics office data.

The governor added that a further risk facing Poland was that the frontline of the war in Ukraine could come closer to its borders, destabilising the economy.

He said the bank had accumulated large reserves of foreign currency and gold, the second of which it was still increasing, to help mitigate risks associated with the war. (Reporting by Anna Wlodarczak-Semczuk, Alan Charlish, Karol Badohal and Pawel Florkiewicz; Editing by Susan Fenton and Bill Berkrot)