Economists believe that interest rates to rise even more
14:41
The main NBP interest rate may increase to 6-6.5 percent from the current 4.5 percent, economists expect. The April increase in interest rates by the MPC has already triggered a large increase in WIBOR rates, on which the interest rates for most loans granted by Polish banks are based.
The NBP president Adam Glapiński explained after the MPC decision that it was not an acceleration of the rate hike cycle, but it resulted from the current data from the economy.
"Firstly, it is the persistence and height of inflation, the second is the war and its rising costs, and the third is the obvious fact that fiscal policy in these conditions will have to be loose. The state has to bear a number of significant, heavy burdens resulting, for example, from the influx of refugees. The large expenses will be accompanied by others, with the prospect of armaments that will have to be implemented," Glapiński said.
It is a clear signal for economists that the MPC will continue the cycle also in the coming months, and the scale of the rate hikes will directly depend on the inflation data.
"We have to assign a significant upward risk to our target rate forecast (5.5 percent). The time window in which inflation will surprise with high readings and, at the same time, the effects of monetary tightening will not be clearly visible in the data, will last several months. The market seems to agree with this interpretation. FRA contracts imply an increase in interest rates up to 6.5 percent,” the economists of Pekao SA bank said.
A forward rate agreement (FRA) is a bet where investors place bets on future interest rates. Experts of PKO BP indicate that the NBP president himself avoided the question of what the target reference rate might be.
