Interest rates – September 2023. Pending Monetary Policy Board decision – what will the MPC do? Forecasts of economists in banks

The two-day Monetary Policy Council meeting is scheduled to begin on Tuesday. We should know the interest rate decision on Wednesday. The main benchmark interest rate has remained at 6.75% since Sept. 8, 2022. The board has not changed interest rates as of the October meeting.

The forecasts we collected show that most economists expect the first rate cut during the next MPC meeting. This will be the first rate cut since May 2020. At that time, interest rates were cut by 40 basis points, and the reference rate fell to 0.10%.

Economists ING Śląski Bank The main event of the week will be the Monetary Policy Board’s decision on Wednesday, which should trigger the start of the monetary policy easing cycle. The head of the Polish National Bank, Adam Glabinski, outlined a scenario for starting interest rate cuts, which included meeting two conditions: (1) inflation falling to single-digit levels, and (2) a clear and obvious decision. “A convincing path to further decline in inflation. The first of these conditions is not currently met, but we expect the president will not be principled in this regard,” they assessed.

According to the preliminary data of the Central Bureau of Statistics, the inflation rate in August 2023 was 10.1% on an annual basis. Compared to the previous month, prices remained at the same level. In July, the increase in prices of goods and services was 10.8% year on year.

“Inflation was close to single-digit levels in August, and in September it will be around 9% y/y or even lower. Therefore, we expect the MPC to cut rates on GBP by 25 basis points this week, and in the following months. It will “bring further easing of monetary policy,” said representatives of ING Bank Śląski. Their forecasts indicate that by the end of this year interest rates on the National Bank of Japan may be cut by 75 basis points.

Economists Credit Agricole They also believe that “despite the failure to meet one of the conditions for the interest rate cut set by the President of the National Bank of Poland (Adam Glabinski) in June, that is, inflation below 10 percent, there is a significant deterioration in the outlook.” Economic growth in Poland will prompt most MPC members to cut interest rates by 25 basis points at this week’s meeting.

Credit Agricole representatives added that “the decision to ease monetary policy this week will be consistent with the market consensus and therefore should be neutral for financial markets.”

Economists M Bank, BNP Paribas I Gubudarstowa Bank Kraguwigo We also believe that the Monetary Policy Committee will decide to cut interest rates by 25 basis points. There are also economists in this group Pecao Bankwho expect interest rates to fall by a total of 100 basis points by the end of this year.

Economists PKO Polski Bank They also expect the first rate cut to take place in September, but at the same time they leave open the possibility of that happening a month later. “We assume it will deliver the NBJ’s first rate cut of 25 basis points. We expect the Monetary Policy Committee to start a cycle of cuts due to the downward trend in inflation, weaker core inflation momentum and worse-than-expected data from the Fed. Real Economy for the Month July, even despite the official failure at the meeting, the head of the Polish National Bank announced the inflation situation in single digits (in August 10.1 percent year on year),” – we read in a commentary on Monday by representatives of the Polish Central Bank, the largest bank in Poland.

At the same time, they emphasized the “high uncertainty”. “A first cut in October is slightly less likely than in September – at the October meeting the single-digit inflation condition will be met,” economists at PKO BP noted.

Economists Santander Bank Poland And Millennium Bank They do not expect a change in interest rates during the MPC meeting in September. According to representatives of Credit Agricole Bank, “If such a scenario materializes, we will have to deal with strengthening the zloty and increasing the profitability of Polish bonds.”

Monetary Policy Committee meeting schedule for decision-making in 2023: