Bad news for borrowers. The decision has been made

The two-day meeting of the Monetary Policy Council (MPC) has ended. Just like last month, the committee decided to leave interest rates unchanged.

Interest rates unchanged again

The level of interest rates is as follows:

• reference rate 3.75% per annum;

• lombard rate 4.25% per annum;

• deposit rate 3.25% per annum;

• rediscount rate of bills of exchange 3.80% per annum;

• bill of exchange discount rate 3.85% per annum.

Let us recall that the Monetary Policy Council cut interest rates during its March meeting. This is the only reduction so far this year. Today’s decision of the Council is not to the taste of borrowers (the reduction would result in a decrease in mortgage or company loan installments), but it is hardly a surprise. Experts expected interest rates to remain at the current level.

The MPC did not surprise experts

– After the March cut, the Council has limited motivation to make another move, especially given the still high geopolitical uncertainty. Today’s strong decline in oil prices, related to reports of a possible US-Iran agreement, should be treated with considerable caution, but if the reports are confirmed in the coming days, such a scenario will reduce the pressure for a quick tightening of the message from the Monetary Policy Council. – emphasizes Agata FIlipowicz-Rybicka, Chief Economist and Director of the Macroeconomic Analyzes Department of Alior Bank, in a comment sent to “Wprost”.

– Possible lower prices of energy raw materials should limit the risk of fuel price increases and support the stabilization of inflation expectations. This reinforces the scenario in which subsequent Council decisions will be delayed rather than pre-emptive. The Monetary Policy Council should wait for confirmation whether normalization on the oil market is actually likely in the near term. In practice, today’s decision may maintain the neutral direction of monetary policy, but with a slightly lower risk of a hawkish turn in further communication – he adds.

The expert forecasts that if de-escalation in the Middle East continues, the space for easing monetary policy later in the year may gradually increase. However, if the energy shock proves to be more persistent, the Monetary Policy Council will be more conservative.

The next MPC meeting will be held on June 1-2, and not on June 9-10 as previously announced.