After the March decision of the Monetary Policy Council to reduce interest rates, some experts assessed that this may be the beginning of further easing of monetary policy in Poland. Some specialists predicted that another interest rate cut could occur as early as July.
See also: Is it better to choose a fixed or variable rate? The conflict in the Middle East is stirring credits
Experts' predictions had one caveat – they assumed stabilization of the geopolitical situation in the Middle East. Then, the March decision of the Monetary Policy Council to reduce the reference rate from 4 percent. to 3.75 percent, could be strengthened with another reduction.
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Now, however, experts cited by the website Strebiznesu.pl believe that the unclear and unstable situation in the Middle East, which affects oil prices, influences the decisions of central banks around the world.
Interest rates in Poland. Reductions may be delayed due to inflation
Turbulences on the energy market may hamper plans to ease monetary policy, which means higher loan installments and more expensive purchases. This situation also affects consumers in Poland. The increase in oil prices affects the cost of living and inflation.
Paweł Majtkowski, quoted by the website zoneabiznesu.pl, notes that interest rate cuts were possible not long ago, but the current situation changes that. He points out that even in Poland, where rates were recently lowered, such a move would be difficult to justify today.
See also: Inflation may increase by 0.5 percentage points. Prices will remain stable before Easter
Paweł Majtkowski from eToro warns that the risk of stagflation is growing, i.e. an unfavorable economic phenomenon that combines high inflation, slowdown in economic growth and rising unemployment. “Higher energy prices may accelerate inflation again and at the same time weaken economic growth,” Majtkowski said in an interview with Strebiznesu.pl.
According to the analyst, central banks will decide to maintain the current interest rates. If oil prices stay above $100. per barrel for several months, the pressure on inflation and economic slowdown may intensify, and in Poland inflation may increase by up to 1 percentage point.
The expert's predictions may be heralded by data from the report by UCE Research and WSB Merito Universities. Experts believe that March inflation in Poland may increase by about 0.5 percentage points. as a result of the escalation of the conflict in the Middle East.
