The Monetary Policy Council (MPC) will make a decision on interest rates on Wednesday, April 6. Economists agree that there will be another hike, although they are divided on its size.
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The Monetary Policy Council, during its March meeting, for the sixth time in a row, decided to raise interest rates. The main benchmark interest rate rose by 75 basis points to 3.50 percent. This is the highest level since February 2013.
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Economists have no doubts that the Council will decide on another rate hike during its Wednesday (6 April) meeting. However, there is no consensus on how much interest rates will increase.
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Interest Rates – April 2022
In their comments, economists pay attention to the new inflation data for March this year. According to a quick estimate of the Central Statistical Office prices of consumer goods and services increased by 10.9 percent year on year. This is more than forecast. The final data will be announced on April 15.
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In the opinion of Bank Millennium economists “unfavorable inflation prospects increase the pressure on the MPC and further aggressive interest rate hikes”. “The stabilization of the situation in the commodity markets in relation to March, the zloty recovering some losses and ‘only’ a moderate rise in core inflation in March, may in our opinion induce the Council to resume interest rate hikes by 50 bp at its meeting this week,” they assessed in Monday’s comment. The reference rate would be at its highest level since January 2013, when it stood at 4.00%.
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PAP / Maciej Zieliński
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Similar forecasts were presented on Monday by economists from Credit Agricole. “We expect the MPC to raise interest rates by 50bp at each of the next four meetings, and thus the reference rate will amount to 5.50% in July this year.” – they wrote.
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In their opinion, “the March rate hike by 75bp was aimed at counteracting market pressure on the zloty depreciation”. “Since then, the situation in the financial markets has stabilized, so we believe that the MPC will return to the pace of monetary policy tightening implemented in previous months” – forecast representatives of Credit Agricole.
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ING Bank Śląski expects an increase by 50 basis points – as it added – “with the risk on the higher side”. “In our opinion, the scale of the rate hike will be smaller than a month earlier as the zloty strengthened by over 25gr against the euro since the previous hike. However, we still expect a systematic increase in interest rates in the coming months to 6.5 percent.” – ING economists wrote.
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Also, according to economists of PKO BP, the Monetary Policy Council will decide this week to raise the reference rate by 50 basis points. Representatives of Bank Pekao, although they wrote about a 50 basis point hike, do not rule out a stronger move up. “We assume that the MPC at its April meeting will raise rates by another 50 bp, although today’s (Friday, April 1 – ed.) Higher than expected inflation reading may induce the Council to a larger hike,” Bank Pekao analysts wrote.
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This is not the only vote in favor of a stronger interest rate hike. Goldman Sachs economists assessed after the publication of the Central Statistical Officethat the Monetary Policy Council would decide to raise the main interest rate again – by 75 basis points – to the level of 4.25 percent. This would be the highest level since December 2012.
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MBank and Santander Bank Polska are expecting a similar upward move. Santander economists believe that the recent inflation data “is a strong argument for continuation of interest rate hikes” and support their expectations that at the next meeting the MPC will raise rates again by 75 basis points, more than assumed by the market consensus.
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A press conference of the president of the National Bank of Poland and the chairman of the MPC, Adam Glapiński, is scheduled for Thursday. The conference is scheduled to start at 15.00.
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photo-source">Main photo source: Shutterstock
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