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Poland Monetary Policy June 2023

Poland: Central Bank stands pat in June

At its 5–6 June meeting, the National Bank of Poland (NBP) left the key reference rate unchanged at 6.75%, as had been expected by markets. The NBP also kept the Lombard rate at 7.25%, the discount rate at 6.85%, the rediscount rate at 6.80% and the deposit rate at 6.25%.

The NBP decided to stand pat amid flagging economic activity and slowing, albeit still high, inflation, as it expects previous rate hikes to curb inflation further going forward. Meanwhile, inflation fell to 13.0% in May from 14.7% in April, mainly due to softer increases in prices for food and non-alcoholic beverages and energy. That said, it remained elevated amid continued pass-through effects from earlier increases in global commodity prices and supply chain disruptions. The Central Bank expects price pressures to continue to decline gradually due to softer activity, lower international commodity prices and a decrease in credit growth due to previous monetary policy tightening.

In its communiqué, the NBP stated that its decisions would remain driven by incoming data and that it would “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.

The next monetary meeting is scheduled for 5–6 July.

Commenting on the outlook, Rafal Benecki and Adam Antoniak, economists at ING, stated:

“In the baseline scenario, we see no rate cuts this year. However, an improvement in the short-term inflation outlook, the strengthening of the zloty and a possible softening of other central banks’ rhetoric in the coming months could serve as arguments for a single MPC rate cut in the second half of the year. We estimate the probability of such a scenario at 30–40%.”

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