The Fed decided to cut interest rates by 50 basis points during its meeting on Wednesday, September 18. The market was almost certain of a rate cut, but there were doubts whether the FOMC (the equivalent of the Polish Monetary Policy Council) would decide to cut rates by 25 or 50 basis points.
Interest rates in the US. The Fed has decided
After Wednesday's decision interest rates in the US are in the range of 4.75-5.00 percent. This is the first change in rates since July 2023 and the first cut since April 2020. “In my opinion, an economic/political mistake, but the Fed knows better” – rated X by Xelion analyst Piotr Kuczyński.
“The market valuation a few hours before the decision spoke of 115 bp of cuts before the end of the year. The new FOMC interest rate projections indicate that the base scenario for the meetings in November and December should be assumed to be a total of 50 bp of cuts,” writes Bartosz Sawicki, an analyst at Cinkciarz.pl, in his analysis.
PKO BP economists pointed out that the argument for the cut was the cooling of the market work and progressive, slow disinflation. Piotr Kuczyński pointed out in an interview with Next.gazeta.plthat there could be at least three rate cuts in the US this year. At least that's what they expect. – They're counting on a 100 basis point reduction in the cost of money in the US, which automatically weakens dollar. If the exchange rate is EUR/USD grows, the zloty automatically gains as well, the analyst said.
The European Central Bank also lowered interest rates. But not the NBP
Let us recall that last week the European Central Bank lowered its key interest rate (deposit) by 0.25 percentage points to 3.5 percent (the previous reduction, also by 25 basis points, took place in June this year). Meanwhile, as the president himself said, the National Bank of Poland Adam Glapinskidoes not anticipate a rate cut this year. Glapiński explained during a recent press conference that in mid-2025 there may be room for easing monetary policy in Poland.