Poles’ loan installments may soon increase. Łukasz Hardt, a member of the Monetary Policy Council, admits that “all conditions are met” for raising interest rates. Sam will vote for this option.
– All the conditions for a prudent normalization of monetary policy are already met. The optimal strategy for the monetary policy in Poland at present is to raise the reference rate by 15 bp – Łukasz Hardt, member of the Monetary Policy Council (MPC), said in an interview with ISBnews.
He pointed out that the risk of delaying the reaction may have adverse effects in the future.
– The longer the Council does not react, the greater the risks will be. Also the risk of an increasing reaction on the side of monetary policy in the future. An earlier and milder reaction is a better situation, he explained.
In response to the question whether it is possible to slow down the pace of asset purchases with the rate hike at the same time, he replied that “the MPC has full freedom in choosing the timing of the reference rate hike”.
See also: Patkowski: high inflation where there is rapid economic growth
He assessed that it is also possible to manage excess liquidity in the banking sector in a different way.
– I would like to point out that The Fed (Federal Reserve System, performing the tasks of the central bank in the US – ed.) Has not increased the reference rate for some time, has not yet limited asset purchases, but has started to manage liquidity quite actively, uses “reverse repo” operations on a larger scale (a financial transaction involving the purchase of a security and a simultaneous commitment to sell it on a fixed date in the future – ed.) and increased the interest rate on excess reserves in June. We should also manage excess liquidity in the sector differently – hence these motions to raise the reserve requirement ratio – he pointed out.
– We should strive for – regardless of the level of the reference rate – that the instruments are such that the Polonia market rate is close to the reference rate. Currently, it is not so, because the required reserve ratio is too low – he added.
The commencement of monetary policy tightening is favored by the high adaptability of the Polish economy to the pandemic situation.
– Even if we have the fourth wave with the intensity leading to the reintroduction of certain restrictions in the economy, in line with the July inflation projection, the impact of these restrictions on the economy will be smaller than in the previous waves. We underestimate the adaptive potential of the economy. He is – in my opinion – quite large, the economy is adapting quite well to the pandemic circumstances in which we operate – said the member of the Council.
– At the September meeting, I will vote for an interest rate hike. The optimal reaction at this point is the signal reaction and the interest rate hike by 15bp – I maintain this and I will support such a conclusion at the next meeting – concluded Hardt.
Record inflation in Poland
As reported in Business Insider Polska, inflation accelerated to 5.4% in August. Every year. A month earlier, it was 5 percent. Recently, prices have risen faster in June 2001, so inflation is at its highest in more than twenty years.
Economists, although they expected an acceleration in price growth, are surprised by the pace. Their forecasts most often mentioned the estimate of 5.2%. yyyyy
However, we are not only breaking the infamous long-term internal records, but we also exceed most countries in the world with the increase in prices, except for two African countries that are unmatched in this category: Zimbabwe and Zambia and Iran, where the price increase is from 24.6 to 56.4 percent. annually.
The answer to a too fast pace of price growth may be the fact that interest rates were raised by the Monetary Policy Council. This is predicted, among others, by Institute of International Finance. “Rate hikes are likely also to occur in Romania (by 75 bp) and Poland (by 90 bp), although central banks in both countries appear to believe that inflation will broadly slow down substantially as the temporary pandemic cost pressure eases significantly by half 2022 ” – the institution announced in its report.
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