-0.3 C
London
Monday, February 17, 2025

The Monetary Policy Council in action. What about interest rates?

Must read

- Advertisement -


The Monetary Policy Council will not change interest rates at the January meeting – says Bank Pekao economist Kamil Ɓuczkowski. In his opinion, reductions may take place in the third quarter of this year at the earliest. The two-day MPC meeting begins on Wednesday.

On the first day of the meeting, the Council will review the second reading inflation for December, which will show a detailed breakdown of individual indicator categories. According to preliminary data, inflation increased to 4.8 percent in December. from 4.7 percent, by 0.2 pp. below consensus.

The decision on interest rates will be made on Thursday.

– We do not expect any change in interest rates, and the general consensus thinks so. We expect that rates may be reduced in the third quarter of this year at the earliest, said Kamil Ɓuczkowski. He added that the markets will listen carefully to the attitude of the President of the National Bank of Poland and the Chairman of the Monetary Policy Council, Adam GlapiƄski.

- Advertisement -

GlapiƄski surprised

The bank's economist recalled the president's speech from December, in which he surprised the market with very hawkish rhetoric. GlapiƄski's words then indicated that the Monetary Policy Council would not reduce interest rates in 2025 due to the end of the freezing period. energy priceswhich may lead to a significant increase in inflation in the fourth quarter of this year.

The head of the National Bank of Poland on reducing interest rates. “It's moving” >>>

After GlapiƄski's statements, communication between the opposing wings of the Council was diversified. Some MPC members still believe that the discussion on rate cuts could start in March (Wnorowski, Kotecki), others point to the third quarter (Dąbrowski, Litwiniuk – “after the elections”). A hawkish signal similar to GlapiƄski's position was sent by Gabriela MasƂowska, who did not rule out cutting rates only in the first quarter of 2026.

– We don't really know yet what will happen after the energy price freeze expires. Taking into account the valuation of electricity futures contracts, it can be assumed that the energy prices set by the Energy Regulatory Office in the new tariffs for households will not differ significantly from the current ones, so we do not expect an inflation spike. It is also possible that the government will extend the freezing of energy prices, said a Pekao economist.

However, he admitted that he did not expect deep cuts this year. In his opinion, this will not be allowed, among others. persistent core inflation.

– We believe that July will be a good moment to start the cycle of cuts, when the Monetary Policy Council will get acquainted with the new inflation projection. Then further, gradual cuts can be expected. In total, we assume a rate reduction of 100 basis points throughout 2025, said Kamil Ɓuczkowski.

Currently the main one NBP interest ratethe reference rate, is 5.75 percent. The last time the Monetary Policy Council reduced the interest rate at the central bank was in October 2023.

Main photo source: PAP/Radek Pietruszka



Source link

More articles

- Advertisement -

Latest article