With or without an interest rate hike, inflation could go up to 20%.

For the first time in a year, the MPC decided not to raise interest rates. Whether the raise would take place or not, it seems that the path to 20 percent. inflation remains open. During the current cycle, rates have risen from 0,5 percent. up to 6,75 percent And the average mortgage borrower pays an installment of 104 percent today. more than a year ago.

Interest rates in Poland unchanged

From October 2021, the Monetary Policy Council raised interest rates at each monthly meeting. The exception was August, when there was no such meeting. In September this year, the Council raised rates by only 0,25 pp. which was supposed to be a signal that the rate of increase cycle is slowly coming to an end. According to earlier forecasts of the National Bank of Poland, the peak of inflation this year was to be behind us. It turned out, however, that inflation in September rose to 17,2%, which is much above expectations. Particularly worrying for the MPC should be the rise in core inflation to nearly 10,7%. This is consumer inflation, excluding its most volatile indicators, primarily food and energy prices. It is the level of core inflation that is influenced by monetary policy.

However, despite this significant increase, RPP decided to wait and not raise her feet this month. This is probably due to the fact that 6 to 9 months pass from the rate hike to its effects. Thus, the MPC decided that inflation (due to the coming recession) will start to decline in the coming months. However, it looks set to rise even further before this decline, perhaps as much as 20%. The MPC decided that it did not have the instruments needed to influence the level of inflation in the short term.

Good news for credit holders

Interest rates in Poland, which remained unchanged, also mean unchanged loan installments and interest on deposits. The best bank deposits currently have an interest rate of 8-8,2 percent. However, as a result of the disappearance of Getin Bank from the market, which recently fought very actively for clients with high interest rates on deposits, the pressure to increase them in the shortest time will be lower.

The lack of an interest rate hike will also weaken the zloty in the near future. The zloty, similarly to the euro, will remain a weak currency in the later stages.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.