Poland Monetary Policy July 2017


Poland: NBP holds rates steady in July

July 5, 2017

As anticipated by market analysts, the National Bank of Poland (NBP) kept the reference rate unchanged at a record-low 1.50% at its 4–5 July monetary policy meeting. In addition, the Bank held the lombard rate unchanged at 2.50%, the deposit rate at 0.50% and the rediscount rate at 1.75%. With July’s decision, the Bank has now kept the reference rate unchanged for more than two years.

Solid economic activity and moderate inflationary pressures underpinned the Bank’s decision to hold off on hiking rates. GDP growth appears to have remained robust in Q2 as a result of healthy employment growth and higher wages, and comes on the heels of a strong Q1. Moreover, the industrial sector appears to be contributing to a resilient domestic economy. Despite positive leading indicators, however, inflation remains subdued and core inflation—while increasing gradually—remains low. Given the Bank’s view that solid domestic activity should only contribute moderately to inflationary pressures in the coming months, a rate hike was necessarily unwarranted this month.

In the absence of clear forward guidance, the Bank’s 2.0% inflation target supports a dovish stance going forward as the probability that consumer prices will overshoot the projection in the medium term is severely limited. Although healthy activity in the domestic sector is expected to put some upward pressure on rates this year, the direction of global demand is more likely to dictate a hike in the reference rate in the near term.

The next monetary policy meeting is scheduled for 5–6 September.

Against this backdrop, all of our panelists expect the reference rate to end 2017 at the current level, with the Consensus at 1.50%. For 2018, the panel sees the rate ending the year at 1.89%.

Author:, Economist

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Poland Monetary Policy Chart

Poland Monetary Policy July 2017

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

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