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Poland Monetary Policy November 2023

Poland: Central Bank stands pat in November

At its 7–8 November meeting, the National Bank of Poland (NBP) kept the key reference rate unchanged at 5.75%. The NBP also left all of its other rates unchanged, keeping the Lombard rate 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 hold its course due to moderating inflation and weak economic activity. On the price front, lower commodity prices, easing supply chain disruptions, weaker domestic activity and previous interest rate increases continued to support a disinflationary trend: Inflation fell to 6.5% in October (September: 8.2%). Moreover, producer prices fell again in year-on-year terms in September. Looking ahead, the NBP considers that previous monetary policy tightening will translate into inflation moving within the Bank’s target of 2.5% plus or minus one percentage point in the medium term.

In its communiqué, the NBP reiterated its commitment to base upcoming decisions on incoming data on inflation and economic activity, 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 interest rates to decline next year amid falling inflation.

The next monetary policy decision will be taken on 5–6 December.

Rafal Benecki and Adam Antoniak, economists at ING, commented on the monetary policy outlook:

“Given the uncertainty surrounding regulated energy prices, the scale of shielding measures in this area, and the future of the zero VAT rate on food, the Council will most likely want to familiarise itself with the impact of the aforementioned factors at the beginning of the year and the subsequent course of the inflation path. We do not rule out that there may be one more rate cut in March, but in general, we assess that the space for further interest rate cuts is severely limited.”

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