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Wednesday, December 6, 2023

Interest rates. Will there be further reductions in NBP interest rates? Economists forecast what the Monetary Policy Council will do

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Interest rates remain unchanged – this decision was made by the Monetary Policy Council (MPC) on Wednesday. The President of the National Bank of Poland, Adam Glapiński, pointed out that “the space for possible further reductions in interest rates in the short term has clearly decreased.” So what can borrowers expect in the coming months? We have collected the latest forecasts from economists of the largest banks in Poland.

During the November meeting, the Monetary Policy Council decided to maintain it NBP interest rates at an unchanged level. It was a surprising decision for economists of the largest banks in Poland, who expected another cut – by 25 basis points (as it happened in October). The reference rate is 5.75%.


Adam Glapiński, the president of the National Bank of Poland and the chairman of the Monetary Policy Council, referred to Wednesday’s decision of the Monetary Policy Council during a press conference. – After earlier adjustment, the space for possible further reductions in interest rates in the short term has clearly decreased – said President Glapiński on Thursday. – Secondly, uncertainty regarding the pace of disinflation in the following quarters has recently increased significantly – emphasized the head of the central bank.

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As Glapiński said, the uncertainty of the incoming data is so great that today he cannot say whether this is the end of reducing interest rates. In the opinion of the NBP president, the coming months will show whether there will be a reduction or not. The head of the central bank noted that perhaps in January the central bank will have clarity on the budget amendment, the government’s fiscal policy, protective shields, VAT levels, etc., and then it will be possible to say more about the interest rates.

The holders of PLN mortgage loans pay particular attention to the decisions of the Monetary Policy Council. The values ​​of reference indicators depend on the level of interest rates, among others: WIBOR 3M and WIBOR 6M, which affect the amount of installments paid. WIBOR together with the bank’s margin are components of the loan interest rate.

Read also: A worrying signal for borrowers. “The market corrects the optimistic path”

So what can borrowers expect in the coming months? We’ve collected the latest forecasts.

Interest rates in 2024

Economists PKO Bank Polski interpret President Glapiński’s words “as a suggestion that until March the Monetary Policy Council will see no arguments for potential changes in interest rates, and the shape of the further path of rates will largely depend on the changes in fiscal policy introduced by the new government.” In March, the National Bank of Poland will publish another projection regarding inflation.

Economists Bank Pekao After the November meeting of the Monetary Policy Council, they increased the forecast of the NBP reference rate at the end of 2024 from 4.00 to 5.25%. This would mean that the main interest rate would decline by a total of 50 basis points over the next dozen or so months.

Economists have made similar predictions Bank BNP Paribas. In the base scenario, representatives of this bank currently expect NBP interest rates to stabilize for one year. In their opinion, the reference rate will remain at 5.75%. until November 2024. Then – according to the BNP Paribas forecast – the reference rate will be reduced by 50 basis points in the fourth quarter of next year. “However, we see a significant risk that interest rates will remain unchanged for a longer period of time until 2025,” noted the bank’s economists.

BNP Paribas

Economists’ baseline scenario ING Bank Śląski assumes that NBP rates will remain unchanged until the end of 2024. Economists mBank they also expect that rates will be maintained at their current level not only until the end of 2023. “Next year, we also expect rates to remain unchanged with some risk of their slight increase if inflation turns out to be more persistent than the Monetary Policy Council thinks,” they said.

Economists Santander Bank Polska noted that “President Adam Glapiński presented a hawkish message during the press conference, signaling that the Monetary Policy Council is unlikely to change interest rates in the coming months.” A hawk is a person who sees keeping inflation low through higher rates as a priority. According to Santander representatives, “the NBP reference rate may remain unchanged at 5.75% for most of 2024.”

In turn, economists Bank Millennium based on the decision in November to maintain interest rates and the speech of the NBP President’s conference, they assume stable NBP interest rates at least until March next year. “Our scenario indicates that there will be cuts in interest rates in the subsequent quarters of 2024. However, the scale of the reductions remains subject to great uncertainty. In such conditions, the risks for our current forecast of a decline in the reference rate to 4.50% by the end of 2024 are directed at towards a smaller scale of easing,” emphasized the bank’s representatives.

According to state economists Bank Gospodarstwa Krajowego “The November message from the Monetary Policy Council suggests that interest rates may remain unchanged until March 2024.” “We do not rule out that the period of no changes in credit costs may be extended beyond the first quarter of next year, especially if it turns out that the better economic situation in the country prevents inflation from reaching the target within the horizon of the March projection (until the end of 2026),” they added representatives of BGK.

The next decision-making meeting of the Monetary Policy Council is scheduled for December 5-6.

Main photo source: PAP/Paweł Supernak

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