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Interest rates – April 2023. Monetary Policy Council of the Monetary Policy Council – meeting in April, economists’ forecasts

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Interest rates in Poland remain unchanged from October 2022. The Monetary Policy Council (RPP) will start a two-day meeting on Tuesday. What decision will the MPC take? Here are the forecasts of the economists of the largest banks in Poland.

On Tuesday, April 4, a two-day meeting of the Monetary Policy Council will begin. We should know the interest rate decision on Wednesday. It will take place after the publication of the preliminary reading inflation consumer index for March, which was higher than market expectations. From Friday’s preliminary data from the Central Statistical Office shows that the prices of consumer goods and services in March 2023 increased by 16.2% on an annual basis, while the market expected an increase of 15.8%.

The main reference interest rate has remained at 6.75% since October 2022. Will it remain at this level also after the March meeting of the MPC? We collected the forecasts of economists.


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What decision will the Monetary Policy Council take?

Economists mBank they expect the Monetary Policy Council to keep interest rates unchanged. “We do not expect any changes neither in the level of interest rates nor in the rhetoric of the whole Council or the president’s side. Although inflation for March did not fall as fast as expected by the consensus, we do not expect it to significantly disturb moods in the MPC, especially that The council is ‘aiming’ for the longer term,” the report said on Monday.

Economists Credit Agricole The most important event this week will be the meeting of the Monetary Policy Council scheduled for Wednesday.

“We expect the MPC to keep interest rates unchanged (NBP reference rate is 6.75 percent). The status quo in monetary policy is supported by the statements of the NBP president at the press conference after the March meeting, which stated that monetary policy is in wait mode -and-see and though cycle interest rate increases has not officially ended, its resumption is very unlikely.

As representatives of Credit Agricole added, the decision to keep interest rates unchanged this week will be consistent with the market consensus, and thus it should be neutral for zloty exchange rate and yields of Polish bonds.

Maintaining the reference rate at 6.75 percent. economists expect Bank Gospodarstwa Krajowego.

In the comments after the preliminary data on inflation, economists PKO BP pointed out that higher than expected inflation data for March suggest that rising core inflation is a reminder that “the road to the inflation target will be long and bumpy”. The NBP inflation target is 2.5 percent. +/- 1 percentage point

“Inflation started its downward march in March, but the growing core inflation reminds us that the road to the inflation target will be long and bumpy. The March data do not change our assessment of the outlook for monetary policy – interest rates will be stable in the coming months, and maybe the MPC will refrain from making announcements possible cuts until he sees disinflation in base terms.

Economists Santander Bank Poland forecast that inflation in 2023 will fall slower than expected by the market and central bank representatives, therefore “it is unlikely that the MPC will decide to cut interest rates this year”.

“We expect that in the coming months the CPI dynamics will continue to decline. However, the momentum of prices is still large and larger than could be expected – on a monthly basis, CPI has increased by 1.1% m/m, and since December it has increased by almost This supports our thesis that inflation will fall slower this year than expected by the market, NBP experts and the NBP president himself.In June, prices will probably be 7% higher than in December, which means that the scenario of President Glapiński , assuming inflation to fall to 6-7% at the end of the year, will become very unrealistic. We expect inflation to fall to 10% at the end of the year.” – indicated Santander economists.

In their opinion, “this makes it still unlikely that the MPC will decide to cut interest rates this year”.

According to economists ING Bank Śląski “By the end of this year, there will be no conditions for easing the NBP’s monetary policy.” “In the following months, CPI inflation will decrease and before the end of the year it will reach single-digit levels, but core inflation will remain high. The March NBP projection indicates that in the scenario of no change in interest rates, CPI inflation will return to the target only in 2025. In such an environment, we find no justification for expectations interest rate cuts in 2023. In our opinion, by the end of this year there will be no conditions for easing the monetary policy of the NBP,” they stressed.

Main photo source: Albert Zawada/PAP

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