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Interest rates. November 2023. What decision will the Monetary Policy Council make? Forecasts by PKO BP bank economist Kamil Pastor

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We expect that the Monetary Policy Council will reduce interest rates by 25 basis points. The reduction will be motivated by a drop in inflation in October and the prospects for a further decline in inflation in the following quarters, predicts Kamil Pastor, an economist at PKO BP bank. On Wednesday, the Monetary Policy Council will end the two-day meeting that started on Tuesday.

In October, according to the Central Statistical Office’s flash estimate, inflation dropped to 6.5 percent with 8.2 percent in September. At the same time, on the occasion of the MPC meeting, we will learn the new November inflation projection prepared by the central bank.

– Our medium-term forecast assumes that further deep declines in inflation will be increasingly difficult and that it will remain above the upper limit for deviations from the target in the near future. However, the new projection will take into account 2026, so it is very likely that inflation in this period will remain within the range of permissible deviations for a longer time – said a PKO BP economist.

The Monetary Policy Council’s inflation target was set at 2.5%. plus/minus 1 point. percent So the deviation range is from 1.5%. up to 3.5 percent

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NBP reference ratePAP/Maciej Zieliński

December without any change in interest rates?

– We assume that the Monetary Policy Council will refrain from changing interest rates in December, but will return to them in January 2024. We believe that the Monetary Policy Council will make four cuts throughout next year and, as a result, we will end 2024 with a reference rate of 4.5 percent, said Kamil Pastor.

Adam Antoniak, an economist at ING Bank Śląski, also predicts that The Monetary Policy Council will reduce interest rates on Wednesday by 25 basis points. In his opinion, there may be a pause afterwards, which will probably last until March.

However, some comments contain signals that a scenario in which rates will remain at their current level after the November meeting cannot be ruled out. “The Council finds itself at a very interesting point – with a new projection for GDP and inflation and in a new political environment with great uncertainty as to the further shape of fiscal policy, including administrative solutions with a significant impact on prices,” PKO BP economists wrote earlier, pointing out to “risks shifting towards keeping rates unchanged,” they added.

Currently, the NBP reference rate is 5.75%. The Monetary Policy Council has cut rates twice this year – the first time in September by 75 points. base, and the second one by 25 points. base in October.

Read more: MPC decision. Economists’ predictions >>>

Main photo source: MOZCO Mateusz Szymanski/Shutterstock

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