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Interest rates in Poland. Santander economists: there is a difference compared to the previous conference of the head of the NBP

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The President of the National Bank of Poland openly announced that if the plan assumed by the central bank is implemented, the chances of reducing rates this year are zero – economists from Santander Bank Polska pointed out in a comment to Adam Glapiński's conference on Thursday. Moreover, as they noted, the head of the NBP did not rule out an increase in rates if inflation does not decline next year.

“At today's conference, NBP President Adam Glapiński reinforced his hawkish message from May – he openly announced that his message is hawkish and if the scenario assumed by NBP is implemented, the probability of rate cuts this year is zero. The main arguments against rate cuts are the expected increase in inflation above 5% at the end of the year and numerous pro-inflation factors, such as loose fiscal policy, wage growth, economic recovery, increase in energy costs,” wrote economists from Santander Bank Polska in a commentary on Thursday's conference of the President of the National Bank of Poland.

On Wednesday, the Monetary Policy Council decided to maintain it interest rates at an unchanged level. On Thursday, Adam Glapiński presented the reasons for the Council's decision at a conference.

Read also: “Inflation will be off target.” The President of the National Bank of Poland takes the floor

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Inflation and interest rates in PolandPAP

“The President of the National Bank of Poland did not rule out a rate increase”

“According to Glapiński, currently even the most dovish members of the MPC have no reason to speak in a dovish tone. Moreover, the president of the National Bank of Poland did not rule out an increase in rates if inflation does not decline next year or it will continue to grow. The possibility of rate increases was signaled clearly and several times, which is a difference from his previous conference. Adam Glapiński said that he hoped that there would be room for rate cuts in the middle of next year (unlike a month ago, when he indicated Q1 2025), which would be consistent with our base scenario,” Santander analysts wrote.

They pointed out that although the President of the NBP emphasized that future decisions depend on data, he focused mainly on the path inflation Consumer Index (CPI) in 2025 and said that rate cuts could occur if the fall in inflation to the target was sustainable.

“The current decline in inflation around the NBP target is, in the bank's opinion, temporary, and regulatory decisions on energy prices are crucial for CPI forecasts. The President of the NBP assessed that rate cut by the ECB has no impact on the Monetary Policy Council's decisions, although it may contribute to the strengthening of the zloty,” Santander economists pointed out.

Main photo source: Shutterstock



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