Current interest rates – after interest rate reductions
The COVID-19 pandemic and the preventive measures introduced to counteract its further spread contribute to the economic outlook deterioration and increase uncertainty about the sustainability of the economic effect of the pandemic.
As a result, the Monetary Policy Council on 17 March 2020 – for the first time since 2015 – decided to reduce interest rates, including the NBP reference rate, which affects their level. The reference rate was reduced by 0.5 percentage point to 1.00%.
At the next Council meeting on 8 April 2020, they decided to cut interest rates further, including the reference rate by another 0.5 percentage point, to 0.50%.
This decision was motivated by the projected further decline in price dynamics, due to the continued decline in global economic activity and lower commodity prices, as well as the weakening of domestic demand. In consequence, the Council decided that despite the loosening of the NBP monetary policy in recent times, the risk of inflation falling below the assumed inflation target remains.
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The current interest rates are as follows:
- Reference rate 0.50%
- Lombard rate 1.00%
- Deposit rate 0.00%
- Rediscount rate for bills of exchange 0.55%
- Discount rate for bills of exchange 0.60%
The changes introduced by the Monetary Policy Council are primarily aimed at reducing the cost of loans, i.e. the amount of their instalments. However, according to many economists, the reduction of interest rates alone will not stimulate credit action. Due to the epidemic, the risk connected with borrowing is still growing, and due to the reduction of interest rates, margins in banks will additionally decrease. To improve financial conditions, it is necessary not only to reduce the cost of money, but also to improve access to credit.
Changes in the interest rates affect the amount of the interest, which after the changes in 2016 can be divided into at least six different categories.
The table below presents the amounts of various interest rates from 2016 onwards:
|
|
till 31.12.2019 |
from 01.01.2020 |
from 18.03.2020
|
till 9.04.2020 |
|
Statutory interest |
5% |
5% |
4.5% |
4% |
|
Maximum interest |
10% |
10% |
9% |
8% |
|
Statutory interest for delay |
7% |
7% |
6.5% |
6% |
|
Maximum interest for delay |
14% |
14% |
13% |
12% |
|
Interest for delay on commercial transactions |
9.5% |
11.5% |
11% |
10.5% |
|
Tax interest |
8% |
8% |
8% |
8% |
Authors:
Grzegorz Witczak
Director of the Commercial Law and Property Department, Advocate
TGC Corporate Lawyers
Klaudia Szatan
Junior Associate
TGC Corporate Lawyers
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