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Interest rates – March 2023. What will be the decision of the Monetary Policy Council of the MPC? Economists agree that the communiqué will be more important in their opinion

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On Wednesday we will get to know the decision of the Monetary Policy Council (MPC) on NBP interest rates. 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 March projection for inflation and gross domestic product (GDP).

The third two-day meeting of the Monetary Policy Council this year began on Tuesday. The decision on interest rates will be announced on Wednesday, the time of the announcement is not known.

In October 2021, the Monetary Policy Council started the cycle interest rate increases. As a result, during the year the main reference interest rate increased from 0.1 percent to 0.1 percent. up to 6.75 percent In October 2022 – later also in the following months – the Council decided to keep the NBP interest rates unchanged.

As a result, the reference rate has remained at 6.75% since October 2022.

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What will be the decision of the Monetary Policy Council?

Economists of the largest banks in Poland they expect interest rates to remain unchanged. “Today, the MPC will decide on NBP interest rates. We forecast that they will remain unchanged – including the reference rate of 6.75 percent,” economists wrote on Twitter on Wednesday Bank BNP Paribas.

“We will also closely monitor the indications of the new inflation projection, the outline of which will be presented today,” they added. During the March meeting, MPC members will learn the latest projection of the National Bank of Poland for inflation and GDP.

According to the NBP, what will be the inflation levels and the condition of the Polish economy in the coming months, we should find out from the information that will be published after the MPC meeting.

“In our opinion, interest rates will remain unchanged, and the Council’s rhetoric should not change. This is also the broad consensus. The most interesting (from our point of view, but probably also from the market’s point of view) will be the latest projection of NBP analysts. Today we will know its basic numbers (ranges for inflation forecasts) and GDP for the coming years)” – wrote economists mBank in the Wednesday morning commentary.

Economists PKO BP also stressed in Monday’s commentary that “from the market point of view, the communiqué accompanying the decision will be more important, as it will take into account the conclusions of the latest March NBP projections for inflation and GDP growth”. In the opinion of representatives of PKO BP, “the new projection of GDP and inflation may be a pretext for the MPC to announce the end of the cycle of interest rate increases – so far we have a 6-month pause.”

“The most interesting element will be the publication of the new inflation projection, which should include a slightly lower inflation path in the short term, a decrease in inflation close to the target in the projection horizon (2025) and a slightly higher GDP trajectory,” echoed the economists. Bank Pekao.

Representatives of mBank on Tuesday perversely wondered “what must happen for a Copernican revolution”, i.e. what needs to happen for the MPC to vote for an interest rate hike.

Main photo source: Paweł Supernak/PAP

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