The Fitch rating agency lowered the forecast of Poland’s GDP growth in 2023 to 0.4 percent from 0.7 percent, and for 2024 to 2.5 percent from 2.8 percent – according to the agency’s latest report. Fitch forecasts further cuts in interest rates by the Monetary Policy Council – to 5.50 percent at the end of this year and to 5.0 percent at the end of 2024.
“We expect that the Polish economy will grow by 0.4% year-on-year this year, lower than 0.7% according to forecasts from June. Reconstruction of private consumption, after the decline inflationshould support a gradual rebound in activity at the end of 2023 and in 2024. Lending to companies is slowing down rapidly, which is caused by declines in investment and working capital loans,” the report wrote.
The agency’s economists expect CPI in Poland to drop to 8%. at the end of this year, 5.0 percent at the end of 2024 and 4.0 percent at the end of 2025
Interest rates in Poland. The agency expects further reductions
According to Fitch interest rates in Poland they may decline by another 50 basis points by the end of the year. up to 5.50 percent for the reference rate. Throughout 2024 and 2025, Fitch expects cuts of 50 basis points. annually, up to 5.0 percent and 4.50 percent at the end of the period.
Doves and hawks in the MPCPAP Business
“The National Bank of Poland signaled that it may cut interest rates when inflation falls to single-digit levels, but then surprised financial markets with a large 75-bp cut in early September, when inflation (the reading for August) was still above 10 percent. Such a move suggests greater confidence of the bank central as to the course of the inflation path and greater concerns about growth prospects,” the agency estimates.
Due to the strong depreciation in response to the large rate cut in September, Fitch revised the USD/PLN forecast at the end of 2023 to 4.50 from 4.30.
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