Poland Monetary Policy


Poland: Central Bank leaves rate unchanged

March 5, 2014

The National Bank of Poland (NBP) kept its reference rate unchanged at 2.50% at its 4-5 March monetary policy meeting. The decision was in line with market expectations and marked the eighth consecutive meeting where 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 remain favorable in the U.S. despite some recent unfavorable data and that recovery has been slow and limited in the Euro area. In terms of the domestic economy, the Bank emphasized that GDP growth in Q4, driven by a strong external sector and domestic demand, surpassed that of Q3. Recent figures in terms of industrial output, retail sales and business sentiment suggest that economic momentum has carried on well into Q1 of 2014. Moreover, despite continued improvements in the labor market, unemployment remains elevated. Regarding price developments, the Bank stated that inflation stood at 0.7% in January, 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.” Scenario projections from the Bank's own Economic Institute revealed that GDP growth will likely gain momentum while inflation will run relatively low. As a result, the Bank decided to keep interest rates unchanged. Moreover, it extended the period during which rates should be kept unchanged to, “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:, Senior Economist

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Poland Monetary Policy Chart

Poland Monetary Policy March 2014

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

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