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Central Bank holds monetary policy steady in September

At its meeting on 8 September, the National Bank of Poland (NBP) left the reference rate on hold at 0.10%, which was in line with market expectations. The NBP also kept the lombard rate at 0.50%, the deposit rate at 0.00% and the rediscount rate at 0.11%. Moreover, the Bank reaffirmed it will continue purchasing government bonds in the secondary market, in line with its quantitative easing program. It will also continue to discount credit aimed at refinancing loans granted to businesses by banks.

The NBP’s decision came amid rising price pressures—inflation hit an over 20-year high of 5.5% in August—which the Bank continues to attribute to transitory factors, and expects to subside throughout 2022. Regarding activity, the Bank sees a continuation of the recovery in the second half of the year, but with uncertainty still elevated due to the pandemic, it saw it as prudent to maintain its accommodative monetary policy.

In its communiqué the NBP offered no explicit forward guidance, but focus will turn to the inflation and GDP report due to be released in November, as a guide to short-term changes in monetary policy. Looking ahead, the majority of our panelists see the Bank leaving the reference rate on hold at 0.10% for the remainder of the year, although an increasing number see rates being raised by year-end.

Malgorzata Krzywicka, Poland analyst at Erste Group, is one of those that envisages a rate hike this year, commenting:

“We continue to think that the National Bank of Poland will deliver a 15bp hike in November after the publication of new inflation and growth projections. However, a delay into Q1 2022 cannot be ruled out. A global easing of the economic recovery, the spread of the Delta variant and a possible postponement of the tapering of asset purchases by the Fed would support a later start of policy normalization in Poland.”

The next monetary meeting is scheduled for 6 October.

FocusEconomics analysts see the reference rate ending 2021 at 0.15% and 2022 at 0.73%.

Poland - Money Data

2015   2016   2017   2018   2019  
Money (annual variation in %)9.6  9.7  4.5  8.8  8.7  

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Poland Money Chart


Poland Money
Note: Annual variation of M2 in %.
Source: National Bank of Poland.

Poland Facts

Value Change Date
Bond Yield2.07-0.30 %Dec 31
Exchange Rate3.79-0.53 %Jan 01

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