Borrowers got a surprising surprise. The MPC decision surprised even experts

• The Monetary Policy Council decided to cut interest rates by 25 basis points. Most experts did not expect a cut at the July meeting.
• In the case of a variable-rate loan of, for example, PLN 400,000 for a period of 20 years, it may be even PLN 70 less in the monthly loan installment.
• Over the entire duration of the loan taken out in January this year for 20 years in the amount of PLN 400,000, it may mean approximately PLN 20,000 less.

The Monetary Policy Council (MPC) decided to cut interest rates by 25 basis points at the end of a two-day meeting

- informed the National Bank of Poland (NBP).

Thus, the reference rate is 5.00%, compared to the previous 5.25%. The last rate cut took place at the beginning of May. The MPC lowered them by 50 basis points. The reference rate fell from 5.75% to 5.25%.

The President of the Polish Bank Association, Tadeusz Białek, commenting on the MPC decision, noted that most experts did not expect a cut at the July meeting , as it was expected to happen in September.

He noted, however, that the MPC's decision fits into the scenario in which, according to many experts , the NBP reference rate will amount to 4.75% by the end of the year.

Of course, it depends on external factors, e.g. the intensification of pro-inflationary phenomena, mainly related to the increase in geopolitical risk.

- he emphasized.

He pointed to the conflict in the Middle East and the war in Ukraine.

These are events that may affect the interest rate cut process

- he noted.

Białek said that the 25 basis point cut is relatively small - especially compared to the 50 basis point cut in May. He added that it would translate into a cut in interest rates.

As he pointed out, for example, in the case of a variable-rate loan for, say, PLN 400,000 for a period of 20 years, it may be as much as PLN 70 less in the monthly loan installment, but over the entire duration of the loan taken out in January this year for 20 years for the amount of PLN 400,000, it may mean about PLN 20,000 less.

The President of the Polish Bank Association added that in the case of fixed-interest loans, the MPC’s decision will only affect new borrowers.

He pointed out that while the interest rate cut has a negative - albeit small, because we are talking about 0.25 percent - impact on banks' revenues , there is also the other side of the coin.

The reductions provide the prospect of increased credit availability for both individuals and entrepreneurs , and also directly affect increased creditworthiness.

- he noticed.

He noted that in the case of entrepreneurs , the cost of credit is not listed in the top three barriers to investment . Usually - as he said - it is 5th or 6th place.

However, it will certainly not remain without influence as one of the elements that entrepreneurs can take into account when analyzing decisions about an investment project.

- said the president of the ZBP.

He stressed that with a total reduction of 75 basis points, the cost of credit will be noticeably lower than at the beginning of this year, which may translate into increased interest from consumers and entrepreneurs.