Poland’s Second Central Bank Interest Rate Cut of the Easing Cycle
October 4, 2023
In the face of above-target inflation, the National Bank of Poland’s reference interest rate had between October 2021 and September 2022 been raised progressively from 0.10% to 6.75%. Meanwhile, Polish CPI inflation had this year crested at 18.4% in February and fallen to 10.1% by August. That set the stage for a 75-basis point initial interest rate cut last month. With inflation dropping to 8.2% in September, a decision was made at today’s October review of policy to enact a second 25-basis point rate. A statement explaining today’s action cites weak economic activity in Poland as pointing to continuing price trend deceleration but also reaffirmed that a rise of the zloty, which officials believe is justified by economic fundamentals, would make the restoration of price stability happen even faster, implicitly suggesting that interest rate cuts could proceed more quickly if the exchange rate in fact strengthens. After today’s action, the reference rate becomes 5.75%.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: National Bank of Poland
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