Monetary Policy Council lowered the interest rates by 50 basis points, the same reference rate now stands at 2 percent.
Source: Bloomberg
The Monetary Policy Council cut interest rates by 50 basis points, the same reference rate now stands at 2 percent.
– He has made a considered our alternative scenario providing deeper than a 25 bp rate cut – says Jakub Borowski, chief economist at Credit Agrucole. – At the same time, the Council reduced the lombard rate by 100 basis points to 3 percent. and kept the deposit rate unchanged at 1 percent. This means a strong reduction – by 400 basis points – the maximum ceiling interest rates on loans to households, as determined in accordance with the so-called. Law antylichwiarską at four times the lombard rate, which will be conducive to increasing demand for consumer loans – adds.
According to the statement after the meeting the main justification for the relatively strong monetary easing was “released data that point to a slowdown the dynamics of economic activity and increase the risk of inflation remaining below target in the medium term “. The Communication also found the wording to indicate a high probability of further easing of monetary policy: “The Council does not rule out further monetary policy adjustments if the incoming information, including the November projection of the NBP, confirm a significant risk of inflation remaining below target in the medium term.”
At the conference NBP president Marek Belka said that the decision was not unanimous. He stressed that the intention of the Council was the focus adjustment feet at a time, and possible further easing of monetary policy should be “relatively quickly”. In his opinion, a stronger rate cuts prompted the Council first of all assess the outlook for economic growth, according to which the majority of the members of the Council recognizes its acceleration in the coming quarters unlikely. Belka also said that inflation in Poland will remain at a very low level in the monetary policy horizon, the Council recognizes quoted from July deflation for a temporary phenomenon.
– Given the content of the message after the MPC meeting and CEO quoted above we maintain our forecast, according to which in the fourth quarter. Council decides to lower interest rates by a total of 75 basis points – Borowski said. – We believe that further reduction of interest rates by 25 bps will take place in November, and a request for a reduction in the scale will support Marek Belka, Elzbieta Chojna-Duch and Anna Zielinska-Głębocka, George Osiatyński and Andrzej Bratkowski. Support for our forecast is strong slowdown in economic growth in Poland in the third quarter., And recorded in this period of deflation that is likely to continue in the fourth quarter – he added.
In his opinion, in effect, to economic growth, as and inflation in the second half of this year. inflation will be at a level significantly lower than expected in July projection of inflation. Borowski points out that in the third quarter. Was also reported significant downturn in the euro area in particular, a strong decrease in activity in the German manufacturing. In addition, since mid-June, so from the moment the assumptions of the July projection of the NBP, the price of Brent crude oil fell by approx. 22 percent. Consequently, the medium-term path of inflation in the November projection will shape most likely at the level significantly lower than expected in July projection of the NBP.
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