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Poland Monetary Policy October 2018

Poland: NBP stays put in October

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 October 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%. It has been more than three years since the NBP last moved the reference rate.

Moderate headline and core inflation as well as an expected softening in economic activity in the quarters to come were behind the NBP’s decision to hold fire. Following another strong quarter of growth in Q2 on the back of buoyant domestic demand, figures for the third quarter point to an extension of the positive momentum, supported by relentless consumer spending and a strong performance from the industrial sector. That said, some moderation in survey-based data in Q3 suggests growth will likely soften, although it will remain robust.

The NBP expects inflation to remain close to the center of the Bank’s target of 2.5% plus or minus 1.0 percentage point in the coming quarters. Given the still-accommodative stance of the European Central Bank and the slight moderation in growth forecast by the NBP, policymakers are likely to stay put over the coming quarters.

The next monetary policy meeting is scheduled for 6–7 November.

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