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Interest rates – July 2023. The Monetary Policy Council will start its meeting, new inflation projection – economists’ forecasts

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The Monetary Policy Council (RPP) will start a two-day decision-making meeting on Wednesday. Economists expect – as in recent months – that interest rates will remain unchanged. In their opinion, more important will be the communiqué after the MPC meeting, in which we should get information about the NBP’s July projection for inflation and gross domestic product (GDP).

The two-day meeting of the Monetary Policy Council will start on Wednesday. decision on interest rates we should know on Thursday. The main reference interest rate has remained at 6.75% since September 8, 2022. The Council did not change interest rates starting from the October meeting.

BNP Paribas economists do not expect a change in interest rates during the July meeting, but they do expect an official end to the monetary policy tightening cycle. This will be favored by progressing disinflation, strong zloty and (perhaps) new macroeconomic projections of the NBP, which will be published after the July meeting of the Council, they explained.

What will be the decision of the Monetary Policy Council?

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In the opinion of representatives of this bank, the next projection of the inflationwhich will be published by NBP in the coming week. “If its indications confirm the return of inflation to the central bank’s target in the next 2 years, discussions on interest rate cuts may intensify at the end of this year. At the moment, however, we maintain our forecast assuming that monetary policy easing will not start until next year Nevertheless, we expect that at the next meeting, the MPC will decide to officially end the monetary policy tightening cycle, read the commentary of Bank BNP Paribas economists.

ING Bank Śląski also does not expect changes in the monetary policy of the NBP this week. “However, we estimate that the chances of a rate cut after the holidays have increased to 65-70 percent, while we previously saw 50 percent, taking into account the guidance of some MPC members, including the president of (NBP Adam) Glapiński,” economists of this bank indicated. “We also see the possibility that the NBP will make more than one cut this year. Our short-term inflation forecasts are optimistic, with CPI falling to single-digit levels in September or August – which should further strengthen the dovish attitude of the MPC,” they added.

A dove is someone who is in favor of lower interest rates. A hawk is someone who prioritizes keeping inflation low.

Read also: When is the first interest rate cut? Two terms

Although PKO BP economists do not expect a change in the level of interest rates, in the face of a rapid decline in inflation, they see “the possibility of softening the message of the MPC and President A. Glapiński’s rhetoric during the press conference.” “Recent votes from the MPC indicated an increasing probability of starting interest rate cuts this year, and next to the decline in current inflation, its future path is very important for the MPC. In our opinion, the new inflation projection, which the Council will learn at the July meeting, may show inflation in band of deviations from the target in 2025, i.e. in the monetary policy impact horizon,” noted representatives of the largest bank in Poland, adding that according to the new NBP study, rates have the greatest impact on inflation after 8-10 quarters.


In the opinion of Bank Pekao economists, “this week’s meeting of the MPC will not bring new accents in the Council’s rhetoric, but it will confirm the direction the Council has chosen. The new NBP projection will be a good justification for this.”

Economists of Santander Bank Polska, mBank, Bank Millennium and Credit Agricole also expect interest rates to remain unchanged during the July MPC meeting.

PAP/Maciej Zielinski

Main photo source: Shutterstock

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