Poland Monetary Policy


Central Bank leaves rate unchanged at historic low

The National Bank of Poland (NBP) kept its reference rate unchanged at 2.50% at its 6-7 May monetary policy meeting. The decision was in line with market expectations and marked the 10th consecutive meeting in which no change was made. The Bank emphasized that keeping interest rates at the current low level supports ongoing domestic economic growth and a return of inflation to the established target. The Bank noted that the global economy continues to grow at a moderate pace. It pointed out that conditions are improving in the U.S. after a slow start to the year, while recovery has been slow in the Euro area and China is showing signs of weakening. In terms of the domestic economy, the Bank emphasized that the gradual recovery is continuing. Industrial output and retail sales were up in March, although by less than expected, and construction also picked up. Moreover, the Bank explained that, “business climate indicators still point to further activity growth in the coming months.” Meanwhile, although the recovery is driving continued improvements in the labor market, unemployment remains elevated. Regarding price developments, the Bank stated that inflation held at 0.7% in March, which is well below its target of 2.5% plus/minus 1.0 percentage points. Moreover, the Bank explained that, even though, “gradual recovery is likely to continue in the coming quarters, inflationary pressures will remain subdued.” As a result, the Bank decided to keep interest rates unchanged. Moreover, it reiterated that the period during which rates should be kept unchanged is, “at least until the end of the third quarter of 2014.” For 2014, panelists expect the policy rate to end the year at 2.85%. For 2015, the panel sees the rate ending the year at 3.52%.

Author:, Economist

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Poland Monetary Policy Chart

Poland Monetary Policy May 2014

Note: NBP Reference Rate in %.
Source: National Bank of Poland (NBP).

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