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Interest rates 2023. When is the first interest rate cut by the MPC? Bank Pekao economists uphold the forecast

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NBP interest rates have remained at the same level since September 2022. Although the Monetary Policy Council has not formally ended the monetary policy tightening cycle, economists do not expect further interest rate increases. In their opinion, the first rate cut may take place soon, although there is no consensus as to the timing. Bank Pekao economists stand by their forecast, despite rising core inflation. Below we write about the expectations of economists of the largest banks in Poland.

The Central Statistical Office (GUS) reported on Friday that inflation in March 2023 it was 16.1 percent. Every year. This is a slightly lower price increase than reported in the initial estimate. At the end of March, the Central Statistical Office announced in the so-called flash estimate that inflation in March this year was amounted to 16.2 percent. Every year. In March, compared to February, the prices of consumer goods and services increased by 1.1 percent.

Economists in the comments to data from the Central Statistical Office pointed to the rising core inflation excluding food and energy prices. According to the estimates of ING Bank Śląski economists, core inflation excluding food and energy prices increased from 12 percent to 12 percent. to 12.3 percent Every year. “The process of disinflation has begun, but the further increase in inflation suggests that it will not be a quick and easy process,” they stressed.

Interest rates in Poland – when is the first cut?

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According to the economists of ING Bank Śląski, “in a situation of deepening downturn, the Monetary Policy Council will not decide to further interest rate increasesHowever, Friday’s “inflation data clearly confirm that any decision to cut interest rates is definitely premature.”

“The subject of possible rate cuts before the end of 2023 has recently stopped being raised by Council members, which is a positive change in its communication. Although the market is still betting on interest rate cuts at the end of 2023, in our opinion they will remain unchanged until the end of the year, and the first cuts we expect at the turn of 3q/4q24” – forecast economists of this bank.

Meanwhile, Bank Pekao analysts maintain their forecast that already in 2023 we will move from interest rate increases to interest rate cuts. This is the result of the answer on Twitter to the question of Marcin Klucznik from the Polish Economic Institute.

“You still expect one rate cut this year and three more in Q1 2024?” asked the Keykeeper. “Yes, but we also see the risk that all this will be delayed” – we read in the response of Pekao analysts.

According to their previously presented forecasts, the reference rate at the end of 2023 will fall to 6.50 percent. At the end of 2024, the main rate is to be at the level of 4.00 percent.

PKO BP economists also expect the first interest rate cuts in 2023. Their base scenario predicts a decline of 50 basis points. This would mean that the reference rate will go down to 6.25% this year.

In our opinion, in order to start cautious reductions in the NBP interest rates before the end of 2023, it is enough for the majority in the MPC to fall in CPI inflation below 10% y/y (possibly in autumn) with the expectations of its further decline and with a stronger recession in the consumer segment than it results from the projection. in the “Economic Quarterly”, prepared by PKO BP, published at the end of March.

“We maintain our predictions that the MPC will decide on two 25bp rate cuts in 2h23. In 2024, the cycle of cuts could be continued on a larger scale, along with a decline in global and domestic inflation and cuts in Fed and ECB rates, as well as in our region,” they added. economists of the largest bank in Poland.

PAP/Adam Ziemienowicz

Economists of Santander Bank Polska and mBank – similarly to ING Bank Śląski – believe that interest rates will remain unchanged this year. Such a scenario is also presented by the Polish Economic Institute, associated with the Chancellery of the Prime Minister.

Main photo source: Albert Zawada/PAP



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