NBP: MPC Prepares To Discuss Required Reserves Parameters
Governor Glapinski revealed during his press conference that the issue of required reserves was discussed yesterday and will be revisited next month after members receive analytical materials. He was answering a question from a PAP Biznes reporter, who noted that in the previous cycles, the MPC usually adjusted the parameters of required reserves (both the reserve requirement ratio and the interest on required reserves). Some background information on the matter:
- Puls Biznesu reported last year that the NBP was conducting comparative analyses of the interest on required reserves in other countries. The underlying concern was that the generous interest on required reserves fuels excess liquidity in the banking sector. However, back at the time, Governor Glapinski insisted that the NBP was not working on changes to the required reserves parameters.
- The NBP currently pays 5.25% interest (equal to the reference rate) on the required reserves, with the RRR set at 3.5%. The MPC voted on a proposal to tie the interest on required reserve with the lower deposit rate rather than reference rate in Jan 2022 but the motion failed; in February 2022 the MPC raised the RRR to 3.5% where it sits until today.
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GILT AUCTION PREVIEW: On offer next week
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UK: Starmer Faces Qs On Growth, Welfare Reforms & Health @ Liaison Committee
Prime Minister Sir Keir Starmer is delivering evidence before the House of Commons Liaison Committee, the seniormost select committee composed of other select committee chairs. Livestream here. The ostensible focus of the hearing is on 'growth, welfare reforms and health', but issues including US tariffs and the rumours of the gov't contemplating the nationalisation of British Steel have also been raised.
- Indeed, the first question came on tariffs and the UK response. Starmer says the UK should not "jump in with both feet" on retaliatory tariffs, but that all options remained on the table.
- On British Steel, PM says gov't is in the "middle of discussions" and "committed" to ensuring continued UK steel production. Starmer says gov't has a GBP2.5bln fund for the sector, with "all options on the table" for protecting the Scunthorpe plant at risk of closure.
- Asked on balancing cutting regulation to boost growth and protecting consumer safety, Starmer says "There's a large chunk of growth we can get by stripping away regulation". Says there need to be checks and balances, but "all of us, myself included, are pretty frustrated by how long things take".
- Of the 11 committee chairs quizzing Starmer today, nine are MPs from Starmer's centre-left Labour party, with one from the centre-right Conservatives and one from the centrist Liberal Democrats. With such a high proportion of chairs coming from his own party the PM may be afforded an easier ride than past PM's with narrower majorities.
