15.4 C
Monday, May 27, 2024

Interest rates – PKO BP forecasts for 2024 and 2025

Must read

- Advertisement -

The Monetary Policy Council (RPP) will be able to adjust the level of nominal interest rates at the end of the year, without effectively easing monetary policy, PKO BP economists believe. In their opinion, it will be possible thanks to an increase in real interest rates or strengthening of the zloty. They also assume further cautious rate cuts in 2024 and 2025.

– We assume that in November a slow cycle of interest rate cuts will begin – by 25 basis points. This will be an appetizer before continuing the cycle in 2024 and 2025. We assume 150 cut points in 2024 and 2025. (…) A stable disinflation process will create space for lowering interest rates at a rate less frequent than every meeting – said Marta Petka-Zagajewska, head of PKO BP’s macroeconomic analysis team.

PKO BP – interest rate predictions

– An appropriate context for adjusting the level of nominal interest rates, without effective easing of monetary policy, creates an increase in real interest rates, calculated ex-ante – taking into account the expected inflation. For the first time since 2016, real interest rates (…) have become positive and will increase slightly. They would grow more if not for the expected correction of the nominal level of interest rates – said the chief economist of PKO BP, Piotr Bujak.

- Advertisement -

In Bujak’s opinion, an additional factor behind the downward adjustment of nominal interest rates without effective easing of monetary policy is the appreciation of the zloty, which tightens overall monetary conditions. Another element is credit holidays.

– Although the issue is not officially resolved yet, it seems, judging by recent statements, that even if there will be an extension, it will not be in the full version as this year. This would mean that interest rates will effectively increase if the reference rate and WIBOR rates do not fall, respectively. In our opinion, there are many arguments justifying starting, very carefully, because caution is needed, lowering nominal rates. (…) Only deeper cuts, which we expect over the next two years, by ca. 150 basis points per year, will mean an effective easing of monetary policy in Poland, he added.

PKO BP’s forecast implies that the level of the reference rate at the end of 2024 will fall to nearly 5%.

PKO BP – CJEU forecasts, inflation, zloty

“We assume that the negative judgment of the CJEU on CHF loans from the point of view of the banking sector will have a neutral impact on NBP decisions due to the good capital position of banks,” PKO BP wrote in the report.

The CPI inflation forecasted by PKO BP at the end of 2023 at the level of 8.2 percent. rdr is close to previous estimates, but its structure has changed.

“The strengthening of the zloty combined with the normalization of commodity prices increases the disinflationary effect of fuel and energy prices (fuel and gas) and we estimate that these two categories will reduce CPI inflation by about 4.3 percentage points by the end of 2023 relative to the February peak. Almost the second this is what food will add, although the scale of slowdown in price growth will be smaller in this case than for energy.Despite important risk factors (mainly climatic and cost factors), which, in our opinion, will anchor the growth of food prices in the medium term well above the inflation target, in the course of 2023 it will decrease by more than half, to about 9 percent year-on-year.

“In 2024, the disinflationary impact of energy carriers and food will slow down. We assume that at the end of 2023, the VAT rate reduced to 0% on some food products will return to 5%, and gas and electricity prices for retail customers will be in line with the URE tariffs. These two elements will disrupt the disinflationary trend at the beginning of 2024, although it is worth noting that thanks to the dynamic decline in commodity prices, the scale of the increase in tariffs vs. the currently applicable rates is significantly lower than we assumed a quarter ago.

Concerns about the pace and extent of disinflation largely reflect price developments in the underlying components of the basket.

The current forecasts of PKO BP show the core inflation at the end of 2023 by nearly 1.5 pp higher than before at the level of 10.6%.

“Companies’ margins are being compressed, but it is small, and a recovery in consumer demand is on the horizon, which may slow down or even reverse this trend, flattening disinflation in this part of the basket. Additionally, the changes planned for 2024 generate additional pro-inflationary risks. Among them is the announced increase in the minimum wage, whose impact on the demand side we estimate at PLN 30-40 billion, more than the effect of indexation of the 500+ benefit Importantly, this change will affect not only the demand channel, but also the cost side, especially in the sector Disinflation continues, and the prospect of achieving the goal is 2025.”

Read also: Tyrowicz: As a member of the MPC, I see a huge mountain

interest rates [czerwiec 2023 r.]PAP

MPC decision

The Monetary Policy Council did not change interest rates at the last meeting. Thus, the main NBP interest rate, i.e. the reference rate, is still 6.75 percent, the deposit rate is 6.25 percent, the Lombard rate is 7.25 percent, the discount rate is 6.85 percent, and the rediscount rate is 6.80 percent. The June meeting was the ninth in a row when the MPC did not change interest rates.

Main photo source: Mateusz Szymanski / Shutterstock

Source link

More articles

- Advertisement -

Latest article