The Monetary Policy Council (MPC) is due to make a decision on interest rates next Wednesday, June 8. Economists are convinced that the headline NBP rate will rise again. However, there is no consensus on the size of the increase. Below is a view of the predictions that have been published in recent days.
During the May meeting, the Monetary Policy Board decided that Increase in interest rates 75 basis points. This was the eighth consecutive rate increase. The cycle began in October 2021. The reference rate rose to 5.25% at that time, the highest level since November 2008. At that time, the headline NBP rate was 5.75 percent.
An increase in interest rates is associated with a rapid rise in prices. On Tuesday, the Central Bureau of Statistics announced, in a preliminary estimate, that the prices of consumer goods and services in May 2022 rose by 13.9 percent. On an annual basis, compared to the previous month, it was up 1.7%.
We will continue to raise prices until we are sure that they will be permanent (inflation – editor) will go down. This is our task as the Polish National Bank – Central Bank Chairman and at the same time Monetary Policy Committee Chairman Adam Glapinski said during the press conference held on May 6 this year.
Therefore, according to economists, the Monetary Policy Committee will decide to raise interest rates next Wednesday.
How much can interest rates go up?
Commenting on Poland’s recent inflation reading, PKO BP economists noted that “the Monetary Policy Committee may react to another significant rate hike” in order to 75-100 basis points.
In the opinion of Pekao Bank economists, the higher inflation reading in May and higher core inflation determine the continuation of the interest rate hike cycle. At the next meeting in June, the board will raise the reference rate by 75 basis points Up to 6 percent – Pekao representatives forecast. This would be the highest level since June 2008.
Economists from Goldman Sachs, mBank and BNP Paribas also expect the board to raise the key reference rate by an amount. 75 basis points. In turn, according to Morgan Stanley analysts, the Monetary Policy Council will slow the pace of monetary tightening and in June will decide to raise 50 basis points.
Economists at ING Bank Śląski pointed to an increase in core inflation to around 8.6%. On an annual basis, it rose 7.7 percent in April. It was noted that this is the fifth consecutive month that core inflation has risen by about 1 percent. From month to month. Core inflation is calculated excluding energy prices And the food.
“As a result, core inflation in the coming months should be core inflation, indicating that price pressure from previous energy and commodity price increases extends to an increasingly broader range of goods and services. Interest rates to reduce consumer demand and pressure increases Prices ”- we read in a comment by ING Bank Śląski.
“Such persistently high core inflation is a signal that the price spiral is spiraling out of control and could seriously worry the board,” the bank’s economists said. “The core inflation trajectory gives the MPC the green light for a solid rate hike in June, Even by 100 basis points– They predicted. According to ING economists, inflation will peak at 15-20% in the last quarter of this year, and the headline NBP will eventually rise to 8.5%.
“However, we note that the level of the CPI (consumer inflation) and the dynamic increase in core inflation suggest that the target interest rate in Poland will be closer to the upper end of our warning range of 5-10 percent.” – they added.
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