The Monetary Policy Board is scheduled to make a decision on interest rates on Wednesday. Is there a chance to get a discount?

• On Wednesday, March 6, we will know the outcome of the Monetary Policy Board meeting – the decision on interest rates in Poland.
• Economists do not expect changes in monetary policy, although inflation in 2024 started at a slightly lower level than expected.
• For the MPC, uncertainty about the government's economic policy and its impact on inflation remains key.
• What is also very important is what the new forecasts for inflation and GDP will show, that is, the path of price growth and economic growth expected by the national central bank.

In their forecasts, economists point to the words of the President of the Polish National Bank and the Chairman of the Monetary Policy Board Adam Glabinskiwhich already in February at its monthly conference said that the Council Interest rate cuts will likely not resume until the end of 2024. He emphasized this Continuing uncertainty Regarding the shape of the government's fiscal policy in the coming months, in particular the still unresolved issues related to the possible extension or termination of solutions that protect consumers from the effects of inflation. This is the factor that Agata Filipovic-Rebeca, chief economist at Alior Bank, drew attention to in an interview with Interia Biznes.

– What will be essential for the Council when deciding on the level of interest rates is: The government's economic policy, especially in the context of anti-inflationary shields – the expert tells us.

– probably MPC members will pay the most attention to whether or not energy prices will remain frozen over the next six months, and if not, how this shield will be reversed.; And whether or not we will deal with large sudden increases in energy prices. She added: We expect these prices to be announced gradually.

– thus The fact that we started the year with lower CPI indices does not mean that we will end the year at these lower levelsThis also affects average annual inflation. In the second half of the year, inflation may reach 6%.On average in 2024, it will range between 4 and 5 percent. – explains the economist.

Grzegorz Malyzewski, chief economist at Millennium Bank, also points out in an interview with Interia Biznes that The January CPI inflation reading will not be the least bit important for the MPC In the context of the meeting that ends on March 6 – and also focuses on suspicion Regarding the form of future fiscal and regulatory policy and its impact on inflation as an important stimulus in the discourse of decision makers responsible for monetary policy.

– Economic inflation In the coming months it will be slightly lower than the path presented in the previous macroeconomic forecast (November – editor), however The uncertainties highlighted by the Council remain, namely what the solutions will be in the area of ​​preventive measures in the context of VAT on food and energy prices. The latter is currently frozen until June 30, but the government announces that it will be unfrozen and at the same time offers solutions that will partially reduce the impact of this freeze, in order to prevent a radical increase in bills. As a result, the inflation rate in the second half of this year may be in the range of 6-7%. After the average in the first half of the year became less than 3%. – says the economist.

– Another uncertainty factor is related to the shape of the government's fiscal policy in 2025. This year we have a record deficit (the government has set the maximum at PLN 184 billion – Editor) – For the Council, the determining factor for fiscal policy prospects is how this deficit will take shape in 2025 – adds our interlocutor.

The expert points out this Core inflation is currently very important to the Monetary Policy Board. This is an indicator of “clean” price growth from the influence of unexpected phenomena, non-recurring phenomena or phenomena beyond the control of monetary policy. The most common measure of core inflation is inflation excluding food and energy prices – because these prices depend largely on price trends in global agricultural and raw materials markets, rather than on Council decisions.

– It is also still uncertain The impact of higher salaries on core inflation, which is closely monitored by the Monetary Policy Board – says Maliszewski. While the CPI remains strongly influenced by energy and food prices, the decline in core inflation will be slower. It is also decreasing and will continue to decrease in the coming months – now it is about 6%, and at the end of the year it will be less than 5%. This is still well above the central bank's target.

– The aforementioned high wage dynamics, low unemployment, and expansionary fiscal policy – all of this would support the rebuilding of economic growth. The Board will want to gain greater confidence that core inflation is on a downward trend and will reach inflation levels in the medium term.. There is still a lot of uncertainty here. Inflation expectations are high, and wages are rising at a rapid pace, which raises workers' wage expectations and leads to higher labor costs. This, in turn, puts pressure on service price inflation.

– Core inflation is also a leading indicator, has not yet fallen to levels that would justify stronger interest rate cuts. – confirms Agata Filipović-Rebeka from Alior Bank. – In January it was about 6%. – he adds.

– Rhetoric in this case Monetary Policy Council It can be maintained either as it currently is, that Interest rates will remain unchanged – or the Council will indicate that they will be lowered depending on the size of the changes in the anti-inflation shields – says the economist. He confirms: – We see the possibility of reducing interest rates in 2024, but precisely – by about 50 basis points by the end of the year, perhaps a little more or less, but certainly not by a few percentage points.

Economists at Millennium Bank assume so, too The Monetary Policy Board may return to monetary easing this calendar year.

– to summarise, The starting point for CPI inflation in 2024, although positive, will not fundamentally change the Council's outlook and position. – says Maliszewski. – In the inflation scenario we currently assume, we see room for interest rate cuts in 2024 – at least at the end of the year.

The Chief Economist at Millennium Bank also draws our attention to the fact that on March 6, after the Council's decision on the level was announced interest ratesWe will learn the most important things Elements of the National Bank of Japan's new macroeconomic forecasts. This is a forecast of Poland's inflation path and economic growth path, prepared by NBP's macroeconomic analysis team and published three times a year: in March, July and November. It plays a key role in the decision-making process of Monetary Policy Committee members.

– At this council meeting, what will be important is not the decision on interest rates, but… Inflation and GDP forecasts, which will show the path of rising prices and economic growth expected by the central bank – says Maliszewski. – with you In the short term, the inflation path is likely to be revised downwards Compared to the previous November forecast, from the Board's point of view, it will be important whether inflation remains within the target in 2025-2026. This is a major determining factor for the Board, which will also allow it to evaluate the Monetary Policy Board's decisions in the coming months with greater confidence – sums it up.