The feet are growing for the ninth time. The MPC sets the reference rate at 6%

Today, the Monetary Policy Council raised the main interest rate by 0,75 pp to 6%. This is the ninth increase in the series that began in October 2021. 3M WIBOR, important for mortgage borrowers, is as much as 0,72 pp higher than NBP reference rate, while in the last 7 years it was on average 0,27 pp

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.

9th raise, but it is not the end

After the ninth rate hike, the base interest rate will be 6%. This is another hike in response to rising inflation. This in May amounted to a record 13,9 percent. (initial estimate GUS), rising by 1,5 pp. The market expected another interest rate hike, and for two weeks now bank deposits with an interest rate of 6 percent have been available on the market. However, when choosing such an investment, you have to take into account the losses resulting from much higher inflation. Despite the current increase, the real interest rate (interest rate minus inflation) in Poland fell to -6,94 percent in the following month. (from -6,36% in April). For the first time in this cycle of increases, the real rate in Poland is lower than in the US, where it amounts to -6,74 percent.

The increases are hitting borrowers

Rising interest rates also cause the WIBOR 3M rate to grow, on the basis of which the interest rate on mortgage loans is calculated. The record-breaking difference between the NBP reference rate and the 3M WIBOR rate is also unfavorable for borrowers. Currently, WIBOR 3M is 6,72%, ie 0,72 pp above the NBP reference rate. Whereas since 2015 WIBOR 3M was on average only 0,27 pp higher than the reference rate. During the periods of interest rate increases, this difference grew on average to 0,45 pp, while in the period of their declines it narrowed to 0,18 pp. This means that during interest rates declines, it can be expected that the difference between the 3M WIBOR and the reference rate will decrease, not however, it has a chance to make up for the current losses resulting from the significantly higher level of WIBOR 3M compared to the reference rate. And this is very bad news for all borrowers, indicating a high probability that the rates will soon increase to over 7%.