Poland Monetary Policy May 2017


Poland: Central Bank leaves policy rate unchanged in May

May 17, 2017

The National Bank of Poland (NBP) decided to keep the reference rate at the record low of 1.50% at its 16-17 May monetary policy meeting, as anticipated by market analysts. In addition, the Bank held its lombard rate at 2.50%, the deposit rate at 0.50% and the rediscount rate at 1.75%. The Bank has left the reference rate unchanged for two years now and Poland’s latest economic developments suggest a stable monetary policy for the coming months.

Looking at data, NBP’s decision came against a background of solid economic conditions: inflation was steady at 2.0% in April, due to a mix of a decline in global energy prices and increasing core inflation. Growth was strong in the first quarter, accelerating from a 2.5% year-on-year increase in Q4 2016 to a 4.0% rise in Q1, according to a flash estimate. The improvement looks broad-based as industrial output, retail sales and sentiment indicators recorded high figures. Moreover, the zloty, though slightly strengthening, has been fairly stable in recent weeks, supporting steady business conditions.

Regarding the rest of the year, the Bank reiterated its wait-and-see stance in the statement, signaling a period of stable interest rates. The Bank emphasized that, “the current level of interest rates is conducive to keeping the Polish economy on the sustainable growth path and maintaining macroeconomic balance.”

Against this backdrop, the majority of our panelists expect the policy rate to end 2017 at the current level, with the Consensus at 1.54%. For 2018, the panel sees the rate ending the year at 1.98%.

Author: Marlène Rump, Senior Data Analyst

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Poland Monetary Policy Chart

Poland Monetary Policy May 2017

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

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