Interest rates remain unchanged from the end of 2023. They are 5.75 percent. and despite monthly meetings of the Monetary Policy Council, they are not reduced. Analysts, however, expect that next year there will be a breakthrough and the Monetary Policy Council will start loosening its monetary policy. At this point, reductions next year seem almost certain. However, the big mystery is when the Monetary Policy Council will decide to do so.
Will we wait long for a reduction in interest rates? A distant date
There is no consensus on this within the MPC. MPC member, Ireneusz Dąbrowski in an interview with the agency Bloomberg revealed that “the most likely scenario for discussing a rate cut is Q3 2025.” He changed his mind because he had previously announced a raise in March next year. – I haven't become more hawkish. Previously, I was simply counting on better data and a faster decline in inflation. Loose fiscal policy is also a factor, he said. Let us recall that the government has set next year's budget deficit at 5.5%. economic production.
During the same conversation, he assured that once the cuts happen, “no significant moves” should be expected. As for the total scale of cuts, he said that in an optimistic scenario, he would like rates to be reduced by more than 200 basis points by the end of 2026. Meanwhile, another MPC member, Cezary Kochalski, does not believe that there was a need to delay the first cut after the break.
March or Q3? Two voices in the Monetary Policy Council
– For a year now, I have maintained my assessment that there may be a discussion about interest rate cuts in March 2025. The scenarios for the following months change their emphasis, but they do not eliminate this scenario. I am prepared to discuss interest rate cuts in March next year. My position is that I do not want to maintain relatively high interest rates longer than necessary, he said interview with ISB News.
At the same time, however, he confirmed what Ireneusz Dąbrowski said. Cezary Kochalski also believes that: “the shape of fiscal policy from the point of view of monetary policy limits the space for easing monetary policy.” This does not mean, however, that he rejects the possibility of a reduction in the third month of next year. – I am prepared for a situation in which if space appears in March. I will be in favor of discussion and considering changes to the parameters of monetary policy. In my opinion, there may be room to cut interest rates in March, he declared.
In addition to Kochalski and Dąbrowski, there are seven other members of the Monetary Policy Council and the president of the National Bank of Poland. Only together will they decide on the interest rates. PKO Bank Polski analysts However, they believe that “C. Kochalski's view is closer to the consensus in the MPC.” This means that reductions may occur as early as March.