Interest rate cuts expected by borrowers may be announced after the meeting of the Monetary Policy Council, which begins tomorrow. Although the estimated value of inflation still points to a value above 10 percent, it is close to single digits.
Before the holidays, some economists for the first time began to talk about the fact that the first - a small, but still - reduction in interest rates could take place in the autumn. While the Monetary Policy Council is an institution independent of the government, the election calendar indicates that if cuts were to be taken to support the ruling party, now is the time.
September MPC meeting
President of the National Bank of Poland and at the same time Chairman of the Council prof. Adam Glapinski said that the first reduction will be possible when inflation is in single digits. We do not know if this condition has already been met. The instantaneous value for August indicates 10.1 percent. but the final numbers may vary slightly. mBank analysts believe that the final value may be lower due to laws on an additional reduction (by 5 percent) in energy prices for the population. The bill has already been adopted by the Saeima. If approved, they will be retroactive.
Alior Bank Analysts Predict Faster Rate Cuts
According to Alior Bank’s chief economist, interest rates will begin to fall as early as September, and the rate of decline will be faster than previously predicted by the market. “Due to the faster pace of disinflation, we assume a faster pace of interest rate cuts in Poland. We previously predicted that interest rate cuts would only begin in the first quarter of 2024; now we expect the first cut to occur as early as September. However, we do not expect that the pace of monetary policy easing will be fast – in 2023 we expect two cuts of 25 bp each. each. This is not a sharp and radical course that could significantly change the inflation forecast, Agata Filipovich-Rybitskaya told PAP Biznes.
Gabriela Maslovska for the rate cut
After the announcement by the Central Statistical Office of the so-called Head of Rapid Inflation Estimate for August, Gabriela Maslovska admitted that she sees grounds for lowering interest rates at the next meeting of the MPC.
- I emphasize that I do not speak on behalf of the Council, I express only my personal opinion. In my opinion, there are reasons for lowering interest rates. If the September meeting of the MPC had proposed lowering interest rates, I would have voted for it. Maslovskaya said.
The MPC member did not want to predict the magnitude of the cut in interest rates. Maslovskaya emphasizes that a thorough analysis of all the data that NBP analysts will provide to the Council before the meeting will first be required.
The interest rate hike cycle is officially over
During the July meeting of the MPC, the last before the summer holidays, the body decided for the tenth time in a row to keep interest rates at the same level. The main base rate since October last year is 6.75 percent.
A day later, the president of the National Bank of Poland (NBP) and simultaneously the chairman of the RRP, Adam Glapiński, announced that the Board had formally completed the cycle of raising interest rates, and the next steps after the conditions were met would mean lowering them this year in phased steps of 25 basis points. The head of the Central Bank noted that, under favorable circumstances, the interest rate could be reduced as early as September, that is, during the next meeting of the IGC.
Source: Wprost
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