Hawkish claws of the MPC and the Federal Reserve

A significant part of the Federal Reserve representatives are in favor of a federal funds rate hike by 50 bp instead of the widely anticipated move by 25 bp, according to the minutes of the last March meeting FOMC.

As for the reduction of the balance sheet Fed, officials agree that monthly limits of around $ 60 billion for treasury and $ 35 billion for mortgage-backed securities are likely to be appropriate, with amounts to be phased in over a period of three months or longer.

This is a greater reduction than the $ 50 billion a month that the Fed set in 2017-2019. US central bank officials also recognized that a tightening of policy may be warranted depending on economic and financial developments.

Interest rates in Poland are tending to 6 percent?

The Monetary Policy Council also showed a hawkish attitude, raising interest rates by 100 basis points to 4,5 percent. The market expected a 50 point hike, although a 75 point move would not be a surprise either.

The scale of the increase shows that RPP intends to fight inflation with determination. Although many factors causing the increase in prices in Poland are external, the measure of core inflation, i.e. excluding food and energy prices, shows an increase to almost 7%.

It is therefore possible that there may be further interest rate hikes in Poland. Based on FRA contracts, the market seems to be pricing in the possibility of an increase in the 3-month WIBOR rate even to the level of 6,5%. This, in turn, could mean the level of the reference rate NBP amounting to 5,5-6,0 percent.