Interest rates in Poland. There is a decision of the Monetary Policy Council

The two-day meeting of the Monetary Policy Council (MPC) ended on Wednesday. The body announced the decision on interest rates. – The Council decided to keep the NBP interest rates unchanged:

• reference rate 5.75% per annum;

• lombard rate 6.25% per annum;

• deposit rate 5.25% per annum;

• rediscount rate of bills of exchange 5.80% per annum;

• bill of exchange discount rate 5.85% per annum.

A surprising decision of the Monetary Policy Council

The MPC’s decision may be surprising, as most economists predicted a 25 basis point reduction in interest rates. According to experts, such a reduction was supported by a large drop in consumer inflation – from 8.2 percent. in September, to 6.5 percent in October. – We forecast that the Monetary Policy Council will decide to reduce interest rates again by 0.25 percentage points. – mBank analysts wrote before the Council’s decision.

ING and Santander experts pointed to the “rate stabilization” scenario. – We think it is almost equally likely that the Monetary Policy Council will refrain from making any further moves, in line with the reasoning recently presented by Ludwik Kotecki: the ceiling at which inflation will move next year will depend largely on the government’s decision (in the matter of, among others, . the scale of unfreezing energy prices, VAT on food), which will be decided in the near future. So a wait-and-see approach now seems attractive – wrote analysts.

Santander experts also drew attention to the fact that the MPC meeting that ended today was the first one after the parliamentary elections.

Before the elections, the body decided to cut interest rates twice. In September, interest rates were reduced for the first time since May 2020, by as much as 75 basis points. This decision was a huge surprise for economists, who speculated that the reduction, if any, would amount to a symbolic 25 basis points. Such cuts were decided at the October meeting.