National Bank of Poland Releases a Dovish Statement

January 14, 2015

Poland’s reference central bank interest rate was cut previously by 225 basis points between November 2012 and July 2013 and then by an additional 50 bps on October 8, 2014.  The 2.0% rate level established after that most recent reduction was retained at the November, December, and January meetings of the Monetary Policy Council.  However, today’s statement has a dovish tone.  The statement observes that growth last quarter may have slowed slightly, inflation remains in sub-zero territory at minus 0.6%, and wage pressure is nil despite lower unemployment.  Officials also note the accommodative policies of other central banks, and it flags the conditional possibility that Polish monetary policy could be relaxed further.

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.

February’s Council meeting is scheduled for the 4th.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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