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Poland Monetary Policy March 2024

Poland: Central Bank stands pat again in March

At its 5–6 March meeting, the National Bank of Poland (NBP) extended its monetary policy loosening pause, keeping its reference rate at 5.75%, as had been expected by markets. The NBP also left all of its other rates unchanged, with the Lombard rate remaining at 6.25%, the discount rate at 5.85%, the rediscount rate at 5.80% and the deposit rate at 5.25%.

The NBP decided to stand pat as, even though the disinflationary process continued, significant upside risks to the inflation outlook persisted. Additionally, labor market conditions remained tight. In January, inflation eased to 3.9% (December: 6.2%)—the lowest rate since March 2021. Moreover, during the same month, producer prices fell year on year for the seventh month running and at a sharper pace. The Bank expects inflation to run at a level consistent with its 1.5-3.5% target band in the coming months. However, the evolution of inflation in subsequent quarters is surrounded by significant uncertainty relating to the impact of the government’s fiscal and regulatory policies on the pace of GDP growth.

In its communiqué, the NBP reiterated its commitment to basing upcoming decisions on inflation and economic activity data while remaining ready to “take all necessary actions in order to ensure macroeconomic and financial stability,” including intervention in the foreign exchange market. Our panelists expect the NBP to cut interest rates this year amid receding inflation.

The next monetary policy decision will be taken on 3–4 April.

Commenting on the future path of monetary policy, ING’s Adam Antoniak and Rafal Benecki stated:

“Our baseline scenario assumes that NBP rates should remain unchanged until the end of the year, but conditions may emerge in the second half of 2024 for a discussion of a symbolic rate cut. In 2025, we see room for interest rates to fall around 75-100 basis points.”

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