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December 9, 2022
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Inflation up. The MPC decided on interest rates

Inflation in June amounted to as much as 3.3 percent. in annual terms – reported the Central Statistical Office. Food is more expensive. What does the Monetary Policy Council (MPC) say about this? She just made a decision about rates. rates.

Inflation up

The prices of consumer goods and services in June 2020 compared to May 2019 increased by 3.3 percent. This information results from the new announcement of the Central Statistical Office. The prices of services increased by 7.4% and goods by 1.8%. A month earlier it was: 7.1 percent and 1.4 percent

Importantly, inflation growth was driven by, among others jump in food and non-alcoholic beverage prices. These increased in June by 5.8 percent respectively. and 6.2 percent

Let us add that the reading is higher than the inflation target of the National Bank of Poland, but it falls within the accepted band of deviations.

MPC and interest rates

Inflation is affected by the MPC and interest rates. In turn, by decision of the Council interest rates were left at the July meeting at the ceilings set at the end of May. So they are at levels:

  • reference rate: 0.10% on an annual basis,
  • Lombard rate: 0.50% on an annual basis,
  • deposit rate: 0.00% on an annual basis,
  • bill of exchange rediscount rate: 0.11% on an annual basis,
  • bill of exchange discount rate: 0.12% on an annual basis.

This is the second MPC meeting at which interest rates have been left. at a constant level.

Surprisingly, the MPC stopped organizing press conferences at which the media could ask about the details of decisions made. Such meetings with journalists have taken place in recent years. Now, when there is a lot to ask, the authorities gave up.

Let’s add that the MPC maintained higher – but still low! – interest rates in recent years of good times. One can think today whether it was a good strategy and whether it was better to raise their level then, to at least limit the inflow of cheap money to the market. Of course, lowering interest rates now, in times of crisis, it could persuade investors to increase cash circulation, but the latter rather avoid it, because they are probably afraid for further decisions of the authorities. At the same time, as you can see, inflation is still rising.

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