Poland Monetary Policy February 2016


Poland: NBP again keeps reference rate at record low of 1.50%

February 3, 2016

The National Bank of Poland (NBP) decided to keep its reference rate at the record low of 1.50% at its 2–3 February monetary policy meeting. The decision matched market expectations and marked the ninth consecutive time that the NBP has left the rate unchanged.

In its accompanying statement, the NBP affirmed that the Euro Area is recovering at a modest pace. According to the Bank, growth is expected to be sustained in the U.S. in 2016. However, China’s economic performance continues to deteriorate, and Russia and Brazil are still in deep recession. Consequently, concerns over weaknesses in developing countries and thus uncertainty regarding global demand remain significant, which has led to a depreciative trend in emerging market currencies worldwide, including the Polish zloty.

On the domestic front, the Bank commented that the economy is expected to have accelerated in Q4 2015, with domestic demand as key driver. The NBP detailed that, “growth is supported by favourable labour market conditions, positive consumer sentiment, sound financial standing of enterprises and high capacity utilization.”

The Bank stated that falling commodity prices in recent months have kept inflationary pressures muted in many economies, including the Eurozone. In addition, a negative output gap and moderate nominal wage growth are contributing to the lack of cost pressure, and, consequently, inflation expectations remain subdued. The Bank emphasized that, “however, the persisting deflation has not yet adversely affected decisions of economic agents.” Meanwhile, the U.S. has seen its core inflation rising recently, which led to diverging monetary policies between the U.S. Federal Reserve and the European Central Bank, with the latter signaling a possible expansion of the scale of its financial asset purchases.

Finally, the Bank concluded that, “CPI inflation will remain negative in the coming months due to the depressed prices of global energy commodities. At the same time, a gradual increase in core inflation is expected and will be supported by stable economic growth amid improving economic activity in the euro area and favourable labour market conditions.”

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2016 at 1.53%. For 2017, the panel sees the rate ending the year at 1.62%.

Author:, Economist

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Poland Monetary Policy Chart

Poland Monetary Policy February 2016

Note: NBP Reference Rate in %.
Source: National Bank of Poland (NBP).

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