According to economists, the Monetary Policy Council will not change interest rates at the meeting ending on Wednesday. Such forecasts are included in the reports of PKO BP, Santander Bank Polska and Bank Pekao. According to analysts, the press conference of NBP President Adam Glapiński, scheduled for Thursday, may be of much greater importance.
On April 4-5, the decision-making meeting of the MPC is held.
Interest rates – what will the MPC do?
“The domestic market is waiting for the outcome of the MPC meeting and the Thursday’s conference of President Glapiński, being more sensitive to any signals indicating a more restrictive attitude of the MPC to monetary policy in the context of too slow cooling of inflationary pressure in Poland,” Bank Pekao economists said in their report. “Greater volatility on the Polish currency should appear with the Thursday’s conference of the NBP president. If A. Glapiński, under the influence of the still high dynamics inflation will refrain from making any declarations regarding the timing interest rate cutsthis may give an impulse for the strengthening of the zloty and an attempt to attack the lower limit of the sideways trend channel on EUR/PLN running close to the level of 4.66.
Citi Handlowy’s economists estimate that in reaction to the new inflation data, investors have partially reduced their expectations for interest rate cuts in the country. “Instead of three cuts, the FRA market is now pricing in two rate cuts before the end of this year. However, taking into account the series of inflation data from recent months, in our opinion, it is reasonable to ask whether there is room for rate cuts in Poland at all. An even more important question is whether whether the next move of the Monetary Policy Council should really be a rate cut, or maybe another rate hike.
“Our own forecast assumes stable interest rates in 2023 and gradual reductions in 2024. However, the expectations of cuts next year are based on a scenario of slowing down the price pressure, i.e. a scenario that has not even started to materialize. If the next inflation data does not bring In this regard, a breakthrough, the discussion of further increases may become fully justified.
In the opinion of Citi experts, taking into account the domestic conditions (double-digit wage increases, still loose fiscal policy, negative real interest rates), the factors reducing the price pressure can be found mainly abroad.
The MPC made the last increase in interest rates in September 2022. Since then, the rates have remained unchanged – the main NBP reference rate is maintained at 6.75 percent.
Main photo source: Rafał Guz/PAP