NBP interest rates are expected to fall in the coming months. However, the Monetary Policy Council (MPC) may return to raising rates as early as 2024. This is the result of the forecasts of mBank economists, who expect no progress in falling inflation next year. “Monetary policy easing may be reversed within a year,” reads the latest analysis of the bank’s representatives.
The next decision-making meeting of the Monetary Policy Council will be held on September 12-13. Some economists expect that the first interest rate cut may take place next month. Among this group there are mBank economists.
“The cycle of hikes has been officially ended and the forward guidance (direction of the NBP’s monetary policy) has been strengthened. Decrease of inflation to single-digit levels will be the basis for interest rate cuts. We expect that the first 25bps reduction will occur in September,” we read in the comments of the representatives of this bank.
They predict that inflation will fall to around 10 percent. year on year in September. “The potential for further declines will be exhausted in the first quarter of 2024. In our opinion, core inflation may fall to around 8 percent at the end of the year,” mBank’s economists assessed.
Interest rates 2024
Interestingly, according to mBank’s economists, “the easing of monetary policy may be reversed within a year (no progress in falling inflation).” They also stated that in the horizon of one year the market is pricing in interest rate cuts by 210 basis points.
The main reference interest rate has remained at 6.75% since September 8, 2022. The table attached to the analysis shows that representatives of mBank expect that by the end of 2023 the reference rate will go down to 6.25 percent, which would mean a decrease by 50 basis points. In the first months of 2024, there will be further reductions. The reference rate at the end of the first half of next year is to be at the level of 5.50%.
mBank economists expect interest rates to increase in the third quarter of 2024. Their forecasts show that the reference rate at the end of next year will be 6 percent.
makroekonomia.mbank.pl
photo-source">Main photo source: MOZCO Mateusz Szymanski/Shutterstock
2023-08-28 10:36:50
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