Narodowy Bank Polski

June 3, 2015

Poland’s monetary policy council left its key policy rate at 1.5% and kept the 2.5% Lombard rate and 0.5% deposit rate unchanged.  In today’s statement, officials defended the preference for keeping this record low interest rate over easing policy further or tightening prematurely.

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 of consumer prices remains negative, although the slight increase in fuel and food prices in the recent period has limited the scale of deflation. However, producer prices growth remains markedly negative, and inflation expectations continue to be very low.

the annual price growth will remain negative in the coming months, mainly due to the earlier sharp fall in commodity prices. At the same time, the expected gradual acceleration of economic growth, amidst recovery in the euro area and good situation in the domestic labour market, reduce the risk of inflation remaining below the target in the medium term.

There’s been one rate change earlier this year, a 50-bp cut in March.  Between November 2012 and January 2014, the main interest rate was cut nine times, lowering such to 2.0% from 4.75%.

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

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