Narodowy Bank Eases Polish Monetary Policy

March 4, 2015

Reductions of 50 basis points in the National Bank of Poland’s reference rate to 1.5%, Lombard rate to 2.5%, and deposit rate to 0.5% were announced in a central bank statement today.  Officials make a case for deepening deflation in Poland: “Moderate wage growth, the fall in global commodity prices and no demand pressure all contribute to deepening deflation, both in terms of consumer and producer prices. Inflation expectations of enterprises and households remain very low.”  The Monetary Council goes on to note downward revisions to projected growth and inflation prepared by the Economic Institute but suggests that this should be the end of the line to easing:

Taking into account prolonging deflation and a significant increase in risk of inflation remaining below the target in the medium term, as indicated by the March projection, the Council decided to decrease NBP interest rates. Decision to lower the interest rates at the current meeting concludes the monetary easing cycle.

The previous rate cut, also by 50 basis points, was announced January 14.  Previously, cuts totaling 225 bps were made between November 2012 and July 2013.  Altogether, the reference rate has declined from 4.75% to 1.50%.

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



Comments are closed.