Central Bank of Poland

May 6, 2015

Poland’s Monetary Policy Council left its reference interest rate at 1.50% as expected.  The Lombard and deposit rates were not changed either and remain at 2.5% and 0.5%.  There have already been two key rate reductions this year, each by 50 basis points in January and March.  From November 2012 through July 2013, the reference rate was lowered eight times from 4.75% to 2.50%.  A statement released today opines that “due to the moderate growth in demand and the continuing negative output gap, there is no demand pressure in the economy. At the same time, low commodity prices and moderate nominal wage growth are contributing to the continued lack of cost pressure. As a result, the annual growth rate of consumer and producer prices remains negative, and inflation expectations are very low.”  But the statement goes on to explain why interest rates are not being reduced further now: “the expected gradual acceleration of economic growth, amidst recovery in the euro area and good situation in the domestic labor market, reduce the risk of inflation remaining below the target in the medium term.”

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

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