MPC raises reference rate to 1.75%

In line with expectations and the consensus, today the Monetary Policy Council raised the NBP reference rate by 50 bp, to 1.75 percent. It is the third move up this year after a 40bp hike. in October and 75 bp. in November. According to Roman Ziruk, Ebury analyst, the tone of the statement from the December meeting of the Monetary Policy Council seems more pessimistic than from the November meeting. 

“Policymakers point to the risks associated with the new variant of the coronavirus, the accompanying uncertainty, and deteriorating sentiment in the financial markets. Of course, they devote a lot of attention to inflation, the increase of which they seem to see more as a global phenomenon, focusing on its global growth and the risk that pandemic disturbances will take longer than expected. Nevertheless, it is important to mention the inflation expectations, which will be limited by the interest rate increase: it is an introduction of an element of the domestic situation, absent in previous statements,” the analyst stated.

Still, the zloty's immediate reaction to the information from the MPC was negative. After the information on rates and the release of the communiqué, the EUR/PLN rate rose to 4.61 against 4.58 at the beginning of the day. 

(WBJ)