According to economists of the BNP Paribas bank, the main rate of the National Bank of Poland will ultimately increase to 8%. It is almost twice as much as today. Increases are also forecast by the economists of ING Bank. If the increase is followed by WIBOR rates, mortgage instalments will increase by a third.

“We are raising our forecast data of the NBP reference rate and we assume that at the end of the ongoing period the interest rate will reach 8% compared to 6.5%, which we expected so far”, reported economists from BNP Paribas.

The bank’s experts justify their change in the forecast by winding up the so-called wage and price spiral. According to the latest data from the Central Statistical Office, the average wage in enterprises increased by 12.4% on an annual basis, while experts expected slightly more than 10% of growth. At the same time, inflation was 11% year-on-year.

After seven increases in interest rates by the Monetary Policy Council (RPP), the main NBP rate – the reference rate, is 4.5%. The last rate hike was made by the RPP at the beginning of April, raising them by 1%.

“The main reason is the winding up of the wage-price spiral, with high economic activity at the beginning of this year and the prospects of fiscal easing. In our opinion, this will induce the RPP to even more aggressive tightening of monetary policy parameters”, predict BNP Paribas economists on Twitter.

The BNP Paribas forecast is the first estimate of such a high increase in interest rates. But market expectations aren’t significantly lower. According to the valuation of FRAs (forward rate agreements), in which investors bet on the level of interest rates in the future, the target level is around 7%.

ING Bank economists believe that the RPP will increase rates to 7.5% due to the pace of wage growth, which exceeds inflation. According to ING, the Council will raise rates by 1% already in May. It would be the second such big raise in a row.

Such a decision will cause an increase in loan instalments as most Polish banks offer a variable interest rate, based on WIBOR rates, which accurately reflect changes in the central bank’s interest rates.

The calculations show that the instalment of a sample loan for 350 thousand PLN, granted in September 2021 for 25 years, after the previous increase, WIBOR increased from approximately PLN 1,582 to PLN 2,750. If the scenario presented by the banks happened, then the instalment would increase by an additional PLN 861 to PLN 3611 per month.

Arkadiusz Słomczyński order