How long will we wait for the rate cut by the MPC?

RPP, as expected, did not change interest rates. We will reach the inflation target only in 2025, and the first rate cut is possible only in 2024. The period of waiting for a rate cut will be record-long, as during the last three cycles it was on average half a year. In the US, this period was 7 months.

In Poland interest rates remain unchanged

The Monetary Policy Council, as expected, did not change the interest rates. The last time rates were raised was in September 2022. Since then, there has been a pause in rate hikes, although the cycle has actually ended. Currently, the most likely economic scenario is the first rate cuts in 2024 at the earliest. Inflation, which fell to 14,7% y/y in April, remains the key variable for interest rates. However, the current decline is mainly a statistical effect, and prices continue to rise. According to the current projection NBP to the inflation target of 2,5%. will only happen in 2025.

Last week there was an interest rate hike in the US - they were raised by 0,25pp. to the range of 5-5,25 percent. According to market expectations, this is the last rate hike, and the first rate cuts are already being priced in. The market predicts that the first rate cut may take place as early as September this year. Since 1970, the average period from the last rate increase to the first reduction is just 4 months, although over the last 3 cycles it is an average of 7 months.

In Poland, the period between the last rate hike and the first cut will be record-long in this cycle. Eight months have passed since the last increase, and we expect the first reductions in 8 at the earliest. During previous cycles of increases, these periods were much shorter. In 2024, the period between the last increase and the first reduction was 2012 months, in 6 - 2008, and in 5 - 2005 months. So, on average, it was half a year.

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.