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Poland Monetary Policy November 2022

Poland: Central Bank stands pat in November

At its 9 November meeting, the National Bank of Poland (NBP) kept the key reference rate unchanged at 6.75%. The NBP also kept the Lombard rate unchanged at 7.25%, the rediscount rate at 6.80% and the deposit rate at 6.20%.

The NBP decided to stand pat again as it reiterated that previous rate hikes were already limiting demand growth, while tightening cycles abroad will limit imported inflation. That said, inflation climbed further to an over 26-year high of 17.9% in October (September: 17.2%) on pass-through of high commodity prices for energy and food costs, partly due to the war in Ukraine. The Central Bank expects the same factors to keep price pressures elevated in the coming quarters. That said, higher interest rates, the fading impact of current shocks and the appreciation of the zloty should contribute to a gradual decrease in inflation.

In its communiqué, the NBP stated that its decisions will remain driven by data and by the impact of the ongoing war in Ukraine on the Polish economy. Therefore, the Bank avoided giving specific forward-looking guidance.

Commenting on the Bank’s decision, Adam Antoniak and Rafal Benecki, economists at ING, stated:

“The post-meeting statement indicates that the NBP rather targets a reversal of the inflation trend and wants to facilitate a soft landing for the economy rather than bring inflation down to 2.5% as quickly as possible. Such a strategy raises the risk of perpetuating high inflation expectations, and this could entail higher costs of containing CPI in the future.”

The next monetary meeting is scheduled for 29 November.

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