Interest rates - April 2022. Monetary Policy Council meeting of the Monetary Policy Council on April 6, 2022 - what is the increase and expectations

The Monetary Policy Council (MPC) will make a decision on interest rates on Wednesday, April 6. Economists agree that there will be another increase, although they differ on how much.

The Monetary Policy Board, during its meeting in March for the sixth time in a row, decided to raise interest rates. The benchmark interest rate rose 75 basis points to 3.50 percent. This is the highest level since February 2013.

Economists have no doubt that the board will decide to raise the interest rate again during its meeting on Wednesday (April 6). However, there is no consensus on how much to increase interest rates.

Interest Rates – April 2022

In their comments, economists focused on new inflation data for March of this year. According to a quick estimate of the Central Bureau of Statistics Prices of consumer goods and services increased by 10.9 percent year on year. This is more than expected. Final data will be announced on April 15th.

Economists at Millennium Bank are of the view that “unfavorable inflation expectations increase the pressure on the MPC and further sharp interest rate increases”. “The stabilization of the situation in the commodity markets with respect to March, the zloty offsetting some losses and ‘only’ a moderate rise in core inflation in March, may, in our view, prompt the board to resume a 50 basis point rate hike on schedule. The meeting is this week.” The reference rate will be at its highest level since January 2013, when it was at 4.00%.

PAP / Maciej Zieliński

Similar forecasts were made on Monday by economists Credit Agricole. “We expect the MPC to raise rates by 50 basis points at each of the next four meetings, so the reference rate will reach 5.50% in July of this year.” – They wrote.

In their opinion, “the March rate hike was 75 basis points to counter market pressure on the zloty’s decline.” “Since then, the situation in financial markets has stabilized, so we believe that the MPC will return to the pace of monetary policy tightening that was implemented in the previous months” – predicted representatives of Credit Agricole.

ING Śląski expects an increase of 50 basis points – he added – “with risk on the upside”. “In our opinion, the measure of rate hike will be lower than the previous month as the zloty rose by more than 25 grams against the euro since the previous rally. However, we still expect a systematic increase in interest rates in the coming months to 6.5 percent.” – ING economists wrote.

Also, according to economists at PKO BP, this week the Monetary Policy Board will decide to raise the reference rate by 50 basis points. Pekao Bank representatives, although they wrote a 50 basis point increase, do not rule out a stronger move. “We assume that the Monetary Policy Committee at its April meeting will raise interest rates by another 50 basis points, although today’s higher-than-expected inflation reading (Friday, April 1) may push the board to an even larger increase,” Bekao Bank analysts wrote.

This is not the only vote in favor of a stronger rate hike. Evaluation of economists at Goldman Sachs after the publication of the Central Statistical OfficeThe Monetary Policy Board will decide to raise the key interest rate again – by 75 basis points – to the level of 4.25 per cent. This would be the highest level since December 2012.

MBank and Santander Bank Polska are expecting a similar upward movement. Economists in Santander believe that the recent inflation data “is a strong argument for continued interest rate hikes” and supports their expectation that the MPC will raise rates again at the next meeting by 75 basis points, more than the market consensus assumes.

A press conference is scheduled for the President of the National Bank of Poland and Chairman of the Monetary Policy Committee, Adam Glapinski, on Thursday. The conference is scheduled to start at 15.00.

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