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Poland Monetary Policy April 2023

Poland: Central Bank stands pat in April

At its 4–5 April meeting, the National Bank of Poland (NBP) kept the key reference rate unchanged at 6.75%, as widely expected by markets. The NBP also kept the Lombard rate unchanged at 7.25%, the rediscount rate at 6.80% and the deposit rate at 6.85%.

The NBP decided to stand pat as economic activity is weakening, and it expects previous rate hikes to curb inflation going forward. Meanwhile, inflation fell from 18.4% in February to 16.2% in March, mainly due to softer increases in prices for fuel, energy carriers and food and non-alcoholic beverages. That said, it remained elevated amid continued pass-through effects. The Central Bank expects price pressures to gradually decline due to weakening activity, lower international commodity prices and a decrease in credit growth curbed by the current policy stance.

In its communiqué, the NBP stated that its decisions will remain driven by incoming data and that it will “take all necessary actions in order to ensure macroeconomic and financial stability, including above all to bring inflation down to the NBP inflation target in the medium term”, including intervening in the foreign exchange market.

Commenting on the outlook, Jakub Cery, analyst at Erste Group, stated:

“Our baseline scenario is a stable target rate until the end of 2023, where the only possibility of a rate cut this year would be ahead of the general elections. Currently, we expect in our baseline the first rate cut in Q1 2024.”

The next monetary meeting is scheduled for 9–10 May.

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