Interest rates. Adam Glapiński and waiting for a “positive miracle”
In a few hours, the Monetary Policy Council will announce its decision on interest rates. There will probably be no surprises – they will be maintained at the current level – but it is worth noting that there are more and more voices indicating a specific date for the first reduction.
Last week, the government adopted a draft amendment to the budget for 2024: it was decided that the maximum deficit level will increase from PLN 184 billion to PLN 240.3 billion. The bill has already been submitted to the Sejm. According to ING BSK bank economist Adam Antoniak, this justifies lowering interest rates, although the Monetary Policy Council needs inflation data to make this decision. And this remains an unknown until we find out how much energy will cost for households next year.
When will interest rates be cut?
In his opinion, this will be one of the reasons why the Monetary Policy Council will start discussing interest rate cuts only next year.
– The President of the National Bank of Poland, Adam Glapiński, said at the last conference that the majority of the Monetary Policy Council is determined to wait until March. Then a new projection will be presented, taking into account government decisions on energy prices, thanks to which it will include a more reliable inflation path. Then, in our opinion, in March, a discussion about reducing interest rates will begin, but the reduction will take place in May, when we pass the peak of inflation. By the end of 2025, the Monetary Policy Council will reduce interest rates by 100 basis points, said Adam Antoniak.
From October 2023, the main NBP interest rate, the reference rate, is 5.75%. The sharp rate increases began in the fall of 2021 and lasted for 9 months. After that, they were frozen for the next few quarters. The only symbolic reduction was 0.25 points. base.
Borrowers whose installments have increased significantly after 2021 are eagerly awaiting a reduction. We have the most expensive loans in Europe, and banks are still increasing the fixed interest rate in their new offer. Data collected by Rankomat shows that the increases were introduced, among others, by: PKO BP, ING Bank Śląski, BNP Paribas and Velo Bank. For example, PKO BP increased the fixed interest rate from 6.78%. up to 7.65 percent
Interest rates and the “positive miracle”
However, those in debt can only wait. Adam Glapiński, chairman of the Monetary Policy Council, said at a press conference after the October meeting of the Council that the first reduction in interest rates could take place in the second quarter of next year, provided that the results of the March inflation projection prepared by economists of the National Bank of Poland show that there is a real chance that the dynamics of price growth in Poland will decline in the following quarters.
– At the moment, it seems that we will possibly reduce it after March, after the first quarter of next year, i.e. in the second quarter of next year. And let’s hope it was so, and some positive miracle could make it happen sooner – but it is not clear yet what would happen – said President Glapiński at the traditional conference, which takes place the day after the end of the meeting.
Such a “miracle” would probably be a faster decline in inflation, but this is unlikely. Economists forecast that CPI inflation will remain around 5% by the end of 2024. year-on-year, and at the beginning of 2025 it will increase due to the expected increase in electricity prices (according to Bank Millennium economists, at the beginning of next year inflation may approach 6% y/y).
