National Bank of Poland’s Reference Interest Rate Left at 1.5%

December 2, 2015

Having cut its interest rate by 225 basis points from 4.75% to 2.5% between July 2013 and November 2012, the Monetary Policy Council did not make a further change until the first quarter of 2015.  Two more 50-basis point reductions were implemented in January and March in response to an increasingly disinflationary global environment.  The Council decided to continue a very accommodative stance with a 1.5% main reference rate, flanked by a 2.5% Lombard rate and a 0.5% deposit rate.  A statement released today had this to say about inflation:

Despite improved labour market conditions, wage growth remains moderate.  This, together with the continuing negative output gap, does not produce any inflationary pressure in the economy. Both the annual consumer price growth and producer price growth remain negative, although the pace of deflation has recently declined. Deflation persists mainly due to a sharp fall of energy commodity prices in the global markets. Inflation expectations are still very low.  ..The risk of a sharper slowdown in the emerging market economies and the impact this may have on global economic activity, as well as the possibility of commodity prices persisting at low levels, and as a result, low inflation in the environment of the Polish economy, remain the sources of uncertainty about the pace of inflation returning to the target.

The statement projects a slower pace to Poland’s consumption-led economic expansion this quarter than in the summer period.

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



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