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Poland Monetary Policy February 2019

Poland: Central Bank holds rates at February meeting

As widely expected by market analysts, the National Bank of Poland (NBP) kept the reference rate unchanged at a record-low 1.50% at its 5–6 February monetary policy meeting. In addition, policymakers held the Lombard rate unchanged at 2.50%, the deposit rate at 0.50% and the rediscount rate at 1.75%. It has now been more than three years since the NBP last moved the reference rate.

The Bank’s decision was underpinned by declining inflation, a moderation in economic activity and the prospect of a prolonged period of loose monetary conditions in the Eurozone, due to a weakening outlook for economic activity across the region. Easing price pressures were reflected by December’s data on both headline and core inflation, while softening albeit solid economic activity in Q4 also fed into the decision to hold rates. Going ahead, the Bank expects GDP growth to slow further and it sees inflation rising only timidly in the coming months, restrained by a freeze on electricity prices and contained oil prices. The NBP will thus likely hold fire for much of the year, with FocusEconomics analysts currently split over whether to expect a first rate hike in the fourth quarter.

The next monetary-policy meeting is scheduled for 5–6 March.

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