Bank Pekao predicts that the basic interest rate at the National Bank of Poland will increase to 4 percent. So it will be almost twice as high as it is now. They expect it to happen soon. The whole cycle of hikes may end by July.
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According to economists, the interest rate NBP will not go back to pre-pandemic levels. And let us remind you that then the main rate was 1.5%.
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See also: Money. It counts
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Experts indicate that ultimately MPC decisions “will depend on the outlook for inflation and economic growth”. They emphasize that those in the first half of the year will be conducive to tightening the monetary policy, i.e. raising interest rates.
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High interest rates, exceeding 3%, are to bring inflation back to the target. For such a central bank, he accepts the level of 2.5 percent. with the possibility of deviation up or down by 1 percentage point. However, it will not be easy or quick. P.ekao predicts that the interest rate at the NBP above 3 percent. will last for years.
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Economic slowdown
Economists also expect a slowdown in the entire economy. In the latest report, they upheld their earlier forecasts of a 4% GDP growth in 2022. At the turn of 2022 and 2023, the GDP dynamics may drop to about 2%.
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Pekao justifies the economic slowdown, including delays in public investment, weak private consumption, and the effect of interest rate increases.
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What about the prices? The Bank estimates that despite the anti-inflationary shield and the assumed reduction of the VAT rate to zero for some food, the price increase in 2022 will accelerate to 7.6 percent.
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