The decision of the MPC to raise interest rates will not lower the current inflation, it is impossible – stressed the president of the National Bank of Poland Adam Glapiński on Thursday. The head of the central bank did not want to say whether yesterday’s decision was a one-off or the beginning of the cycle. “For now, we will be looking at what the reaction will be to our decision and we hope it will be positive,” he explained.
Glapiński explained at the conference that interest rates had been raised “to some surprise on the market”. – The market predicted 15 points, we suffered 40 points, almost three times more. We also wanted it to happen this way – he said.
Interest rate hike – the head of the National Bank of Poland explains
– Our decision was aimed at limiting the risk of inflation persistence above our inflation target in the medium term. This risk has increased recently due to the occurrence of further supply shocks. They shifted the scale of inflation expectations upwards, clearly this whole path moved upwards. They lengthened and raised the path of expected inflation. She will be raised higher and longer. We know this before the publication of the November projection. That is why we decided to react now – he explained.
He made a reservation that the MPC decision would not have immediate effects. – Our decision will not lower the current inflation, because it is impossible – said Glapiński.
He added that the MPC decision meant “withdrawing to the positions that were in May 2020”. – We have phased out the afterburner that was introduced to sustain the economy during the crisis. We came to the conclusion that the basic elements of this crisis are behind us, although we do not underestimate the fact that the pandemic is still ongoing – said Glapiński.
The head of the NBP said at the conference that “things are possible in nature and we do them, and those are impossible”. – We will not lower the prices of crude oil, fuels, electricity and gas on our own. All this is not our responsibility, it is impossible – he emphasized.
– Inflation is the result of these supply shocks, which monetary policy has not had, and will never have an influence on – he added.
According to the forecasts of the central bank, inflation will hit 6% by the end of the year. – The Monetary Policy Council will continue to react to incoming information. Information concerning, first of all, the economic situation: what is the economic situation, is the economy maintaining the good rhythm in which it emerged from the pandemic crisis, is the economic situation continuing. On the other hand, inflation. To what extent is it shaping, whether it is accelerating very much or not … it will finish – said the president.
Interest rates up
At its one-day meeting on October 6, the Monetary Policy Council unexpectedly raised interest rates – the reference rate by 40 bp to 0.50%, the Lombard rate by 50 bp to 1.0%, the rediscount rate by 40 bp to 0.51%, the discount rate by 40 bp to 0.52% The MPC kept the deposit rate at 0.0%.
The decisions of the Council affect the wallets of Poles. In the event of an increase in interest rates, borrowers can expect higher loan repayment installments.
Higher interest rates mean at the same time a higher three-month WIBOR, which is most often the basis for the interest rate on mortgage loans in PLN. – WIBOR does not change in exactly the same and at the same time as NBP interest rates, but in a very similar way – Jarosław Sadowski, chief analyst of Expander Advisors, recently explained in an interview with TVN24 Biznes.
Main photo source: PAP / Rafał Guz