Retail bonds have tripled their share of total government bond-buying this year. The reason for such a great interest are the practically zero interest rates on bank deposits, which so far have been the most frequently chosen form of investing savings by Poles.
However, with inflation in excess of 4 percent keeping money in the bank is a real loss. Therefore, increasingly better remunerated and well-off consumers are looking for safe havens for their financial surpluses.
Last year, government bonds significantly increased in popularity. According to the data of the Ministry of Finance, securities for a total amount of almost PLN 28.4 billion were sold, while a year earlier it was over PLN 17 billion. In the period of January-April this year sales are close to PLN 14 billion. Recent months have brought sales of PLN 3-4 billion. April 2020 was record-breaking in this respect, with a result of over PLN 5.4 billion.
- In fact, the only real answer to the lack of interest on deposits are treasury bonds. All those issued in Poland to fill a hole in the budget are divided into two parts: the so-called wholesalers, which are bought at auctions by the largest ones, i.e. banks, investment funds, and retail ones. We are seeing a very strong increase in interest in the latter – explains Marek Zuber, an economist, in an interview with the Newseria Biznes news agency. – Retail bonds have always accounted for 4-5 percent of the entire value of the issue. I think that this year it will be even around 15%, i.e. a threefold increase in the share. People actually jumped on them, because they, firstly, have a higher interest rate than deposits, and secondly, they are even more reliable, because the state stands for their safety.
Record low interest rates meant that banks seek interest on deposits higher than 1%, and these can also be counted on the fingers of one hand, with almost always the condition to open an account in given bank. Most institutions offer an interest rate of 0.01 percent. With inflation exceeding the band of deviations from the NBP’s inflation target (2.5% +/- 1 percentage point), savings actually lose their purchasing power.
In April, consumer inflation was 4.3%, the highest since March 2020, more than economists’ expectations, which hovered around 3.9%, and much more than the 3.2% reading recorded in March. Economists expect an acceleration of price growth up to 5–6%. this year, and the declarations of the members of the Monetary Policy Council show that there is no point in tightening the monetary policy in the form of, for example, limiting the purchase of assets, not to mention rate hikes. The dovish-minded economists have an advantage in the current composition of the council, and the terms of office of the current MPC members will start to expire only in 2022.
The interest rate for two- and three-year-olds is fixed and amounts to approx. 1 percent. Private investors can also buy Polish inflation-indexed treasury bonds, which means that they will receive a certain margin above the level of inflation – this is the rate of increase in the prices of consumer goods and services, adopted for 12 months and announced by the Central Statistical Office in the month preceding the first month of a given interest period. Four-year and ten-year bonds are available. In the first year, however, the interest rate is fixed and much lower: 1.30 percent for four-years and 1.70 percent for ten-year-bonds, only then is the margin plus inflation. Family bonds (six- and twelve-year bonds), which are a product for 500 plus beneficiaries, are also inflation-indexed.