As expected, the December meeting of the Monetary Policy Council decided to leave interest rates unchanged. This means that the main interest rate remains at 6.75%. Due to the fact that such a decision was expected by the markets, the zloty practically does not react.
The National Bank of Poland, in its latest inflation forecast, showed that inflation will hit the target, albeit only in 2025. According to the MPC, the current level of interest rates is already sufficient to bring inflation to the target level within the forecast horizon.
Interest rates at this level may stay longer
– During the November conference, Professor Adam Glapinski himself pointed out that the Monetary Policy Council wants inflation to moderately approach the target, and not fall sharply. From this point of view, today’s decision seems not surprising. Of course, during the previous two decisions, the market saw a chance that rates could jump to 7 percent, but in the end this did not happen, said Michal Stainiak, senior analyst at XTB, in a “hot” comment after the announcement of the MPC decision.
In his opinion, even with a jump in inflation to 20 percent. in the first quarter of next year, interest rates should remain unchanged for a long time. “On the other hand, if inflation continues its recent downward trend, there could be pressure for cuts, as some MPC members have already suggested,” he added.
Borrowers are waiting for cuts
Professor Adam Glapinski hopes inflation will fall to single digits by the end of next year, which he and some members believe could create grounds for lowering interest rates. Borrowers, as well as the authorities, certainly expect lower interest rates due to the reduced risk of an economic downturn or even a recession. On the other hand, the NBP itself takes into account that such a technical downturn may occur next year, which will be another factor that can reduce inflation.
If the MPC does complete its rate hike cycle, which is likely to happen, if inflation does not surprise with a big jump early next year, then there may be some downside signals. The market sees the possibility of a decline even by 75-100 bp. within 12 months, although real double-digit inflation does not offer any prospects for any cuts.
A moment after the decision, we had to pay PLN 4.6903 for the euro, PLN 4.4600 for the dollar, PLN 4.7494 for the franc and PLN 5.4433 for the pound.
LIBOR is slowly falling
In turn, Bartosz Sawicki from Cinkciarz.pl noticed that although interest rates have been held at the same level for three months, loan payments are still a little cheaper, because WIBOR is falling.
– At the same time, WIBOR rates began to gradually decrease, which, under the influence of changes in expectations, fell by about 0.4 percentage points. in a few weeks. For a loan with PLN 400,000 left to repay in 200 months. PLN, reducing this scale will mean a lower contribution of about 100 PLN. However, it is not necessary to count on a further strong decline in the core indices in the coming weeks. They should be stable for many months until the MPC starts preparing to cut interest rates, Cinkciarz.pl analyst predicts.
Source: Wprost
