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Poland Monetary Policy April 2019

Poland: Central Bank stays on hold at April meeting

As widely expected by market analysts, the National Bank of Poland (NBP) kept the reference rate unchanged at a record-low 1.50% at its 2–3 April monetary policy meeting. In addition, policymakers held the Lombard rate unchanged at 2.50%, the deposit rate at 0.50% and the rediscount rate at 1.75%. The Central Bank ended an easing cycle in March 2015 and has stood pat since then.

The Bank took the decision against a backdrop of low inflation and softening economic activity, and as the European Central Bank resumed stimulus policies to counter the economic slowdown. Moderate price pressures were reflected by March’s data on headline inflation, which nevertheless hit a five-month high, while available indicators for Q1 point to healthy but easing economic growth.

Looking ahead, the Bank expects GDP growth to slow further and sees inflation rising only mildly in the coming months. That said, analysts are revising their forecasts, with some already predicting a rate hike by the end of the year on the grounds that the recently announced measures to increase welfare spending and cut taxes may boost consumption and add pressure on prices, which would likely prompt the NBP to tighten its policy.

The next monetary policy meeting is scheduled for 14–15 May.

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