Poland Monetary Policy


Poland: NBP keeps reference rate unchanged for the third consecutive month

January 14, 2015

The National Bank of Poland (NBP) kept its reference rate unchanged at 2.00% for the third consecutive month at its 13–14 January monetary policy meeting. The decision was in line with market expectations.

In its accompanying statement, the NBP mentioned that global economic growth continues moderate. According to the Bank, the U.S. economy is continuing to recover at a solid pace and its outlook appears to be positive. In contrast, economic activity in the Euro area remains subdued and its GDP projections for 2015 were recently revised downward. The large emerging market economies, such as Russia, are also sluggish economic growth in Russia is nearly flat. On the domestic front, the NBP noted that economic activity moderated in the fourth quarter of last year, due to weaker growth in industrial production, construction and assembly sectors. As a result, growth in retail sales decreased and wage pressure remained limited.

Regarding inflation, the Bank stated that annual inflation remained negative in November and was below market expectations. According to the Bank, the decline in consumer prices reflected both the lack of domestic demand pressure as well as low global oil prices. The NBP pointed out that the sharp decline in prices for oil has been conducive to inflation staying at very low levels in many countries, which has prompted major central banks to keep interest rates at historically-low levels.

The Bank decided to keep its reference rate unchanged at 2.00% for the third consecutive month after cutting it by 50 percentage points at the October meeting. Nevertheless, the Committee stated that, “if the expected period of deflation extends, which would increase the risk of inflation remaining below the target in the medium term, and incoming data confirm a slowdown in economic activity as well as weak growth in the environment of the Polish economy persists, the Council does not rule out further adjustment of monetary policy.”

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2015 at 1.82%. For 2016, the panel sees the rate ending the year at 1.97%.

Author:, Economist

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