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Interest rates and Monetary Policy Council (November 2023). Forecasts of ING Bank Śląski

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We believe that the Monetary Policy Council (MPC) will reduce interest rates by 25 basis points – says Adam Antoniak, economist at ING Bank Śląski. In his opinion, there may be a pause afterwards, which will probably last until March.

The two-day meeting of the Monetary Policy Council begins on Tuesday and will announce its decision on Wednesday. This will be the first meeting of the Council after the parliamentary elections.

– We expect that the Monetary Policy Council will reduce interest rates by 25 basis points. The reason for the reduction is that inflation remains in a downward trend, the October result was better than expected. We will also learn the new inflation projection, Antoniak said.

In October, according to the preliminary estimate of the Central Statistical Office, inflation dropped to 6.5%. with 8.2 percent in September.

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MPC decision on interest rates

– In the next month, December, the Monetary Policy Council is reluctant to lower interest rates unless something exceptional happens. Therefore, we believe that a pause will begin in December and may extend until March next year, i.e. until the next inflation projection. The Monetary Policy Council will want to see how inflation will develop after the changes that will take place at the beginning of the year – said the economist.

He explained that there may be price changes at the beginning of the year resulting from administrative and regulatory decisions. The issue is whether the new government will maintain the reduced VAT rate on food and what gas and electricity tariffs the Energy Regulatory Office will approve.

– We think that the new government will decide on some protective measures and further anti-inflation shields. In our opinion, there will be no adjustment to market prices in one step – said an ING BSK analyst.

He also added: – If inflation remains low in March despite these administrative changes, the Monetary Policy Council will decide to reduce rates by another 25 basis points. And this will probably be the last reduction in this cycle, because we believe that inflation will reach its lowest level at the turn of the first and second quarter of 2024, and may increase thereafter. If it increases to 5 percent or slightly more, there is room for interest rate cuts will be small.

This week’s highlight

Decision on interest rates this is the highlight of this week on the domestic financial market. Together with the MPC’s decision, the market will learn the basics of the November inflation projection GDP.

In September this year The Council decided to reduce the NBP interest rates by 75 basis points. This was the first interest rate cut since May 2020. In October, the Monetary Policy Council cut rates by another 25 basis points. The reference rate is currently 5.75%.

PAP/Maciej Zieliński

The forecasts we have collected show that economists of the largest banks in Poland expect the third consecutive reduction in NBP interest rates. It is emphasized that this may be the last rate cut this year. Some comments also include signals that a scenario in which rates will remain at their current level after the November meeting cannot be ruled out.

Read more: MPC decision. Economists’ predictions >>>

Schedule of MPC decision-making meetings until the end of 2023:

  • November 7-8,
  • December 5-6.

Main photo source: PAP/Radek Pietruszka

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