We are on a collision course with perhaps even double-digit inflation and the MPC may have no choice but to roll back its policy of stimulating the economy at low interest rates. Economists believe that interest rates will rise next Wednesday, the only question is how far? Most forecasts 0.5 p. Loans will soon become more expensive, and those who have already taken them should prepare for larger installments.
- Economists have no doubt that the Monetary Policy Board will raise interest rates on Wednesday after the latest inflation data
- Most expect a rise of 0.5 dpi. Combined with the previous height, this gives a total of 0.9 p
- This increase from the average housing loan 330 thousand. PLN gives an increase in the monthly premium by about PLN 250
- More such information can be found on the Onet homepage
The inflation rate was 6.8 percent. in October – This surprising information was provided by the Central Statistics Office on Friday. Surprise, because the average analyst ratings were 6.4 percent, and only the biggest pessimists estimated 7 percent, or even 7.1 percent.
Among these were the economic pessimists of the Leviathan Confederation. They claim that it is not inconceivable that the final reading of the GUS will be 7 percent. according to their expectations.
– [6,8 proc. – red.] This is more than market expectations and less than ours (7%). However, price volatility in the global market may lead, as in the previous month, to a revision of the data and We could end October at the 7 percent level. – reported Marius Zielonka, an economist with the Lloyatan Confederation.
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He points out that core inflation, i.e. to which NBP theoretically refers to its target inflation forecast (2.5% +/- 1 pp), is now probably 4.5%, i.e. it is already 1 pp above the target’s upper range.
Chief Economist Swamir Dodik has expressed concern about the path to double-digit inflation. Inflation is looking for the next rise. Before us are two-digit levels – he writes on Twitter.
The pace of growth that we are currently recording may encourage the Monetary Policy Council To raise interest rates again on Wednesday. Although we do not hide that perhaps it is not in the hands of the NBP or the Ministry of Finance – says Mariusz Zielonka.
The Polish Lewitan Union economist not only expects a rate hike already at the November 3 meeting, but also predicts it Analysts of almost all major banks: ING Economics, mBank Research, PKO BP, Pekao.
The consensus is a 0.5 point increase. Percentage average premium amounting to a total of PLN 247
How much will rates rise? “We believe the MPC will raise NBP rates at its November 3 meeting o 50pb [0,5 pp – red.] It won’t be the end of the cycle– PKO BP economists write on Twitter.
In the Barkett poll, the consensus on Wednesday’s MPC decision was 50 basis points, or 0.5 points per inch – Picao analysts wrote.
What does this mean for the average borrower who repays the loan? Assuming a 0.5 percentage point rise on Wednesday, we have an overall increase of 0.9 percentage point since October, which is 0.4 points at the October meeting and perhaps 0.5 points in November. The average value of the housing loan granted in the second quarter of this year amounted to 330 thousand PLN. PLN – according to the AMRON-SARfin report, provided by the Polish Banks Association.
0.9 percent on the average loan amount of 330 thousand. PLN is 2970 PLN, divided by 12 months It gives an amount of PLN 247.50. The average monthly loan installment may increase, given that there are different forms of repayment and some borrowers have taken a fixed (more interest payments at the beginning, less at the end, not to be confused with a fixed interest rate), and a decreasing installment (the principal The money is repaid equally with interest).
But this will not be the end of the highs at all. Forecasts indicate that the main rate will rise to 2%, And it may be even higher.
By the end of 2022, up to 2 per cent. Reference price
Goldman Sachs economists assume a 25 basis point (0.25 basis point) increase in the reference rate on Wednesday, although they also see a good chance of a 50 basis point (0.5 basis point) rise.
He added, “At the meeting of the Monetary Policy Committee, it will also be announced Now NBP predictionthat can be used by NBP Changes to clear tough policy guidelines [pieniężnej – red.]- We read in the Goldman Sachs comment.
Marek Rogalsky, Principal Currency Analyst at DM BOŚ, has a similar opinion. In the current situation, inflation is out of control and we should see a rise in interest rates. It is no longer a question of whether they will raise in November, but how much they will increase. In my opinion, an increase of 25 basis points [0,25 pp – red.] It will not be enough. Forecast moves to 50 basis points in November [0,5 pp – red.]. Next year, I have the impression that We should reach the reference rate of 2 percent. There may also be an increase in December, Business Insider says.
Still on Wednesday, commenting on the exchange rate, Marek Rogalsky noted that by the end of next year, prices will rise “by at least 1 point”, so he now has higher expectations. This confirms that the mood has changed after Friday’s data and expectations are increasing regarding the monetary policy normalization of the MPC.
There is a conflict with the European Union in the background, which affects the exchange rate of the zloty, and its weakening also accelerates inflation. The economist at DM BOŚ just wonders “whether MPC decision makers would be brave enough to do so.” They will raise interest rates by as much as 50-75 basis points, which may surprise the markets positively.”
Iberi analysts pointed out that even four days ago, before knowing the latest data on the October price hike With an average forecast of 2.25-2.50 percent. Reference rate at the end of 2022 “Based on FRA rates, we can say that the market expects WIBOR 3M to rise by about 135 basis points in the next six months and about 190 basis points in 15 [miesięcy]. This means that he expects to raise the NBP reference rate to 2.25-2.50 percent. At the end of 2022 ”- they wrote in the analysis.
Since these indicators were at 6.4% with inflation expectations, it is likely that the market has already raised its expectations.
“We assume that interest rate hikes will continue, and decision makers (seeing inflation in the 6-7% range soon) will decide at least two record increases (by 25 basis points) by the end of the first quarter of 2022, One of them may come before the end of this year ”- they predicted.
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