The interest rates highest since 2014
22:09
As expected, the MPC raised interest rates by 50bp, which means the highest level of the reference rate since 2014. The Council raised reference rate to 2.25%, deposit rate to 1.75%, lombard rate to 2.75%, rediscount rate by 2.30%, and discount rate to 2.35%.
In reaction to the decision, we observed a limited reaction to the zloty, which remains relatively strong in relation to the euro. At the same time, the valuation of the 3-month WIBOR in the horizon of the year has been adjusted by approx. 20 bp towards 4.1%. The announcement did not introduce any significant changes. The Council still points to the necessity to continue the monetary policy tightening cycle, the pace, and scale of which will depend on the data. Further increases and those already implemented are, in turn, to limit the building of excessive inflation expectations. Moreover, the Council still maintains that it is ready to make currency interventions when needed. Along with the increases in regulated prices at the beginning of January, one should expect a continuation of rate hikes later in the year, and the announced anti-inflationary shield will only postpone price increases, but will not prevent them in the end. The same impact on price dynamics will be a possible reduction of VAT on food to 0%.
