Let’s remember – President Adam Glapinsky said that raising interest rates will only be possible when there is certainty that the epidemic does not affect the economy, and inflation will be above 3.5 percent. It will be of the nature of the request. According to Picao, we are already on the verge of meeting these conditions, but we have not.
In turn, according to Pekao Bank economists, the first condition will be checked when the next wave of the epidemic comes.
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In their opinion, its economic effects will almost certainly be less than in previous waves. The report also indicated that the second condition of the above-mentioned conditions has already been fulfilled and that inflation is above 3.5%. It will run until the first quarter of 2022.
“As for the third condition, it has not been met, or at least that’s what the National Bank report shows,” the Bekao report wrote. The point is that central bank analysts see inflation as a symptom.
Pekao Bank economists believe that these factors will prevent the MPC from changing its stance on inflation in the coming months.
“We believe that the MPC’s view of inflation has a chance to change in the first quarter of 2022. Then, in our opinion, interest rates will also be raised,” wrote the Pekao Bank report.
Both the content of the statement after the MPC meeting and the results of inflation expectations for July indicate that the board intends to keep interest rates stable for a longer period, despite the expected rise in inflation in the coming quarters.
Although the Governor of NBP admitted in a statement last week that the monetary tightening began “not before the fall of this year”, we believe that this scenario is unlikely due to the high probability of the fourth wave of the epidemic in the fourth quarter, associated with low rates of immunization of the population in Poland.
At the May meeting of the Monetary Policy Committee, most members of the Monetary Policy Committee agreed that raising interest rates “will be justified only if the epidemic ends,” and that the necessary conditions for tightening monetary policy are also “a sustainable economic recovery and the emergence of the risk of excessive growth caused by inflation demand factors.