Black clouds over those who are paying off their loans in Poland. The Monetary Policy Council made a decision on interest rates

Interest rates up again. The Monetary Policy Council made another decision to stop inflation. This is bad news for people with loans.

The Monetary Policy Council made a decision on the level of interest rates. During the meeting on June 8, another rate hike was decided. This is in line with market expectations, but differs from the suggestions of some economists, including the former prime minister and head of the NBP – Marek Belka. He suggested that the MPC should break the rate hike cycle and see how the market reacts to the current moves.

Interest rates up once again – higher loans instalments

However, the Monetary Policy Council decided to continue the cycle of interest rate increases and raised them for the ninth time in a row. The MPC raised the reference rate to 6%. from 5.25 percent, the central bank said. At. At 16:00 CET the communiqué after the MPC meeting was published. It was also announced. The market consensus predicted an increase in the reference rate by 75 bp, although some analysts did not rule out a larger hike.

“The Council set the NBP interest rates at the following level:

  • reference rate 6% on an annual basis;
  • lombard rate 6.5% on an annual basis;
  • deposit rate 5.5% on an annual basis;
  • rediscount rate 6.05% on an annual basis;
  • discount rate 6.1% on an annual basis;

The resolution of the MPC takes effect on June 9, 2022, “we read in the press release. On Thursday, June 9, at 3:00 pm, a press conference of the president of the National Bank of Poland (NBP) and the chairman of the MPC, Adam Glapiński, is scheduled.

The MPC raised interest rates for the first time in October 2021, including the reference rate to 0.5%. with 0.1 percent. Today’s hike is the ninth in a row.

Analysts predicted an increase by 75 basis points

Even before the MPC decision , there were comments from market analysts. They were quite unanimous as to the amount of the rises.

– The history of the rate hike cycle we are in was very uneven (we had 40bp, 50bp, 75bp, 100bp in a fairly random pattern). It seems that 50bp is such a “neutral / moderate” step and today the risks for our forecast are bending in this direction. However, the base variant is still + 75bp. – mBank economists emphasise.

“The MPC probably sees that the economy is slowing down slightly, but not excessively. The MPC also sees a rapidly rising inflation and a warm labour market (this will probably last longer than the GDP growth rate itself). Thus, in our opinion, decision-makers will come to the conclusion that there is nothing to wait for, because 5.25 percent. it does not stabilise inflation in principle in any horizon of the inflation projection, they add.

On the other hand, the economists of PKP BP, after the last inflation reading in Poland (13.9% year on year), indicated that the Monetary Policy Council may react to this data with “another large rate hike”, in the range of 75-100 basis points. Goldman Sachs and BNP Paribas also expect an increase in the reference rate by 75 basis points.

Source: Wprost


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