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Interest rates – February 2023. The Monetary Policy Council, meeting on February 7-8, 2023 – what decision will the MPC take? Economists’ forecasts

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This week the Monetary Policy Council will decide on the level of interest rates. The two-day decision-making meeting will start on Tuesday. According to economists, this is the most important event this week on the domestic financial market. What decision will the MPC take during the February meeting? Below we write about the forecasts of economists of the largest banks in Poland.

On Tuesday, February 7, A decisive two-day meeting of the Monetary Policy Council will begin. The main reference interest rate has remained at 6.75% since October 2022. What decision will the MPC take during the February meeting? We have compiled the forecasts of economists below.

We should know the decision of the MPC on Wednesday.

Meeting of the Monetary Policy Council

Economists PKO Bank Polski expect “The Council will remain in wait and see mode, waiting for both the January inflation as well as for the March inflation projection.” “Also, the communiqué and the press conference of the President of the NBP are unlikely to provide us with more clues as to the future course of monetary policy. It is possible that (conditional) statements of the NBP President will suggest a possibility interest rate cuts in the ‘foreseeable’ future (i.e. probably the end of 2023/beginning of 2024) – it seems that this is also a market scenario, so it should not impress investors much.

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The press conference of the president of the National Bank of Poland and at the same time the chairman of the MPC, Adam Glapiński, is scheduled for Thursday, February 9. The conference is scheduled to start at 15.00.

Similar forecasts are presented by economists Bank Pekao. “The MPC remains in the de facto wait and see mode and waits for confirmation of the downward trajectory of inflation (in the first place for the March inflation projection). Therefore, the next move of the MPC will be interest rate cuts, but it is too early to discuss this ” – they emphasized. “Therefore, the February meeting will bring neither changes in monetary policy nor signals about future changes,” they concluded.

Economists mBank wrote that “it is difficult to expect any change – interest rates should remain at the current level”. “A bit of ferment in the circle of the Council may be sown only by the March projection. The data is dovish” – they indicated in Monday’s commentary.

ING Bank Śląski expects the Council to leave interest rates unchanged awaiting the results of the March macroeconomic projection. “In our opinion, in 2023 there will be no conditions for interest rate cuts due to persistently high core inflation, although stabilization or even declines in global energy prices (including fuels) will be conducive to a decline in the main inflation rate over the coming months.

PAP/Maciej Zielinski

Economists Bank Millennium also expect interest rates to remain unchanged. “The Council has not formally ended the cycle of interest rate increases, however, in our opinion, their next increase is unlikely. In the face of inflation approaching the peak and the increasingly noticeable slowdown in domestic demand, the MPC adopted a wait and see strategy and it should be maintained also in February” – wrote..

In their opinion, “the possible formal end of the cycle of interest rate increases may take place in March, when the new projection of inflation and GDP will be published”. “The prospect of interest rate cuts remains remote as amid tight labor markets, a shallower recession in Germany and the opening China’s economy the expiration of the price pressure from the demand side will be slow” – indicated the economists of Bank Millennium.

According to 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 equal to 6.75%). The fourth consecutive decision of the MPC in January to keep interest rates unchanged was in line with the declarations made by the NBP president and some members of the National Bank of Poland in public statements Council’s reluctance to tighten the policy further,” they noted.

In their opinion, “the status quo in monetary policy is also supported by A. Glapiński’s statements at the January press conference, who indicated that, according to NBP, at the end of 2023 inflation will reach a single-digit level.” “The decision to keep interest rates unchanged this week will be consistent with the market consensus and thus should be neutral for zloty exchange rate and profitability of Polish bonds” – noted representatives of Credit Agricole.

In the comment Santander Bank Poland we read that “interest rates will most likely remain unchanged for the fifth time in a row, and the Council will remain in the mode of waiting for more credible signals from the economy on trends in economic growth and inflation”.

Main photo source: Pawel Bednarz/Shutterstock



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