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Interest rates may soon fall both in the United States and in the euro zone. This is how economists read the statements of the heads of central banks that have been made over the last several dozen hours. Decisions made on both sides of the ocean are likely to have an impact on the zlotywhich was discussed by President Adam Glapiński during Thursday’s press conference.
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Will the United States lower interest rates?
Fed Chairman Jerome Powell, during the second day of a hearing before Congress, said that The Federal Reserve is “close” to being confident that inflation will sustainably fall below its targetwhich is necessary to reduce interest rates – PKO BP experts write in their analysis.
Powell pointed out that rate cuts “can and will start this year”, adding at the same time that central bankers are aware of the risk associated with starting the reduction cycle too late – we read in the report.
“The belief in imminent (June) reductions in interest rates of major central banks supported the sentiment on stock markets, which reached new highs in the US,” the bank’s analysts emphasize.
The European Central Bank may lower interest rates
Similar decisions may be made on our side of the ocean. The European Central Bank left interest rates unchanged on Thursday (refinancing rate: 4.50 percent, deposit rate: 4.0 percent).
However, what the head of the ECB suggested is more important. “During the press conference, CEO Christine Lagarde said that no rate cuts were discussed at the current meeting, but a consensus was reached that inflation was heading towards 2%.. Further decisions, as before, will depend on incoming data, forecasts and assessment of the strength of monetary transmission. The ECB must reinforce its belief in the durability of disinflationary processes and will not commit to specific deadlines, the pace and scale of changes in monetary policy, it will also not wait with reductions until the inflation target is achieved,” we read in the bank’s report.
However, even if no firm declarations were made during the conference regarding the moment of the first reduction, However, the latest ECB projections seem to prepare the ground for it – emphasize PKO experts.
President Lagarde suggested that by the April meeting, knowledge on inflation pressure will be only slightly greater than currently, with a much more complete set of key ECB information will be available in June – they indicate.
Hence the conclusion that in Europe (specifically the euro zone), a reduction in interest rates is possible this year.
Will interest rates remain high in Poland? This may affect the zloty
The president of the NBP commented on the suggestions of the ECB and the Fed during Thursday’s press conference. According to Adam Glapiński the interest rate situation seems completely clear by the end of June, and the second half of the year could bring the need for a change.
Prof. Glapiński also stated that ePotential decisions of the Fed and the ECB to reduce rates will not be an automatic reason for reducing the NBP rates, although it will probably strengthen the zloty, the bank’s analysts point out.
And in connection with the position of the head of the central bank, they maintain the forecast of stabilization of NBP rates in the near future due to the signaled hawkish attitude of the Council. “However, we assume the possibility of reducing rates by 25bps in November, after the Council becomes acquainted with the next inflation projection,” they explain.
Adam Glapiński also emphasized that the expected inflow of EU funds, if exchanged on the market and not at the NBP, could result in further strengthening of the zloty. Therefore, the Polish zloty may be influenced by both the reduction of interest rates by the FED and the ECB, as well as the decisions of the Polish government.
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