Increase in interest rates in Poland

So far, the main NBP interest rate for the banks was 0.1%, and because of that we experienced very cheap loans and practically zero interest on deposits or savings accounts. Due to the extremely fast progressing inflation the first negative effects have occurred and increased this indicator to 0.5% in October 2021.

What does the interest rate hike change?

The first that is most noticeable is the higher cost of loans. This is due to the fact that as part of these increases, the lombard rate is also higher (from 0.5 to 1.0%), which affects the amount of the interest installment of our loan. This is not the worst moment yet, because in March 2020 we had a very large cut due to the epidemic situation. To this day the world and our country as well have made up for the losses associated with the pandemic. The lombard rate before March 2020 was 1.5% – so we are already close to this level. Considering that our society is heavily indebted, this could be a circle that will further accelerate all inflation.

How does this relate to deposits and savings accounts?

In theory, of course – interest rates on deposits will increase. Unfortunately,the reality has no mercy for us, because the pace of inflation is so high that it completely compensates for this change and our savings continue to depreciate when we do not invest them outside the bank. All these changes are aimed at stabilizing the market, but you cannot forget that the rates might be raised along with rising inflation. It is currently assumed it will be increasing less, but continue to increase until it can reach 2% at a critical moment.