Another blow to the finances of the Poles loomed.  MPC member leaves no illusions

In the situation in which the Polish economy has found itself, few people ask themselves “Will?” , but “How far?” The Monetary Policy Board will raise interest rates in July. Everything indicates that the interest rate in NBP will rise for the tenth time in a row. Currently, the main rate is 6 percent.

MPC member has bad news

member monetary policy board In an interview with PAP, Byznes believes the Poles should prepare in July to raise interest rates again, this time by 100 basis points.

– You can’t fight 14 or 16 percent. At rates of 6%. If we end the rate-increasing cycle too soon, when the whole world is just getting started, we will end up with much weaker zlotys and higher inflation. It should be remembered that the exchange rate channel is the strongest and the fastest in affecting inflation, Koteke told PAP.

– In my opinion, the only correct interpretation of the statement about the end of the rate-increasing cycle is that The increments should be much higher, therefore, maybe a little more will be needed – he added.

President of the National Bank of Poland Adam Glapinski At the beginning of June, he said that the cycle of increasing interest rates in Poland is closer to the end than the beginning, and in the fourth quarter of 2023 interest rate cuts are possible.

The rest of the article is below the video

See also: See also: Record inflation in Poland. “President Glapinsky has lost faith in his words.”

high inflation

In Kotecki’s opinion, there is no good answer as to how many interest rates there should be in order to combat inflation effectively, because inflationary conditions change.

– I suppose the scenario of inflation rising in the coming months, then slowing down a bit at the end of the year, and then picking up again at the beginning of the new year, because One has to take into account the enormous risk of massively large increases in gas and electricity prices, which will immediately translate into prices for other goods or services. In the first quarter of 2023, inflation may rise very strongly. These conditions mean that macroeconomic policy should be more restrictive – said the MPC member.

According to Kotecki, the Polish economy is resistant to supply shocks and will not fall into recession next year, although the slowdown in growth will be strong.

“But without slowing down, inflation will not go down.” – added.

What do you then do with the interest rate on the required reserve?

According to Kotti, there is a need to discuss the interest rate on the required reserve funds, which is currently set at the reference rate level.

– The reserve ratio of banks in this cycle has doubled and has already returned to the level of 3.5%. before the epidemic. We have already talked a little in the Council, so far without result, about the interest on these reserves, because they carry the reference rate, which means that by raising the reference rate, the Council at the same time increases the banks. interest on these reserves. Today, they carry much higher interest than individual or corporate deposits. It appears that when further spikes occur, Kotecki said, it may be necessary to return to this discussion.

Let’s remember that on Friday, July 1, the Central Statistical Office will release a preliminary inflation reading for June 2022. However, economists have no illusions. We are waiting for another increase in prices, up to the level of 15.5 percent.Which would be another blow to the finances of the Poles. If these analyzes are confirmed, it will be the highest price increase since March 1997, when inflation hit 16.6%. That is, for 25 years.

The next meeting of the Monetary Policy Committee is scheduled for July 7.

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