See also: Interest rates will reach 3%? Goldman Sachs forecasts quick increases in Poland
The coronavirus has cut interest rates
In Poland, the level of interest rates is set by the Monetary Policy Council. The MPC is a decision-making body National Bank of Polandwhose task is to establish assumptions and implement the state’s monetary policy. The coronavirus pandemic has done a lot central banks in Europe lowered interest rates. In some countries, they turned negative. In Poland, until October this year, interest rates remained at a record low level.
Read also in BUSINESS INSIDER
–
See also: Inflation and interest rate hikes? Funds that follow George Soros’ strategy are a solution to this
Effects of reductions and increases in interest rates
The reduction in interest rates translates into a decrease in WIBOR rates, and this in the amount of the mortgage loan installments. The effect is an incentive for entrepreneurs and natural persons to borrow, which allows to increase economic activity, reducing interest rates on deposits.
–
– explains attorney Suchcicki.
The interest rate increases observed since October this year contribute to an increase in the actual annual interest rate on loans and borrowings, which in turn translates into higher and higher monthly installments. On the other hand, the increase in rates is also related to an increase in interest rates on bank deposits and is an opportunity to slow down inflation.
See also: The sixth increase in interest rates in Hungary
Another rate hike is coming soon
December 8, 2021 is the day of the next MPC meeting, when interest rates will probably be raised again.
If necessary, interest rates and other elements of monetary policy will be changed; NBP interest rates will be adjusted in such a way as to prevent the persistence of high inflation
–
– Adam Glapiński, the president of the NBP, recently declared, quoted by PAP.
However, as late as July 2021, Adam Glapiński pointed out that inflation was increased by external and largely temporary factors, which, in his opinion, translated into the lack of premises for a change in interest rates.
NBP forecasts of inflation wrong
In July, analysts of the National Bank of Poland forecasted that inflation would rise, but only to a level in the range of 4.6-4.7 percent. in the second and third quarter of this year. Now the situation has changed dramatically. In November, economists say we will break the 7 percent mark. Even the latest NBP projection does not provide for it.
In the so-called NBP’s central forecast analysts predict 4.9% inflation. in 2021, 5.8 percent in 2022 and 3.6 percent. in 2023 In July, the forecasts were lower by 0.8 pp, 2.5 pp and 0.2 pp, respectively.
–
