National Bank of Poland votes to decrease interest rates by 25 bps

By Tali David

Minneapolis, June 5 - The National Bank of Poland's Monetary Policy Council decided to lower its interest rates by 25 basis points at a meeting held Tuesday and Wednesday, according to an announcement from the bank.

The reference rate was cut to 2¾% from 3%, the Lombard rate to 4¼% from 4½%, the deposit rate to 1¼% from 1½% and the rediscount rate to 3% from 3¼%.

The council said that global economic activity remained weak in the first quarter. However, economic growth differed significantly across economies. GDP growth acceleration in the United States was accompanied by persisting recession in the euro area and some decline in GDP growth in some major developing countries, including China.

In Germany, GDP growth was positive, whereas in other large euro area economies GDP continued to decline.

Weak global activity growth, and the previous fall in commodity prices, has supported further decline in inflation in many countries.

In Poland, preliminary data on GDP in the first quarter point to a slightly stronger than expected weakening in economic growth. Decline in GDP growth in the first quarter resulted from lower positive contribution of net exports to GDP growth amidst persistently declining domestic demand.

The bank said that consumer price inflation declined again in April, reaching 0.8% year-over-year, a level markedly below the inflation target of 2.5%. The decline in inflation was mainly driven by a lower growth in energy prices, including prices of fuels.

At the same time, low level of core inflation, as well as a stronger decline in producer prices, confirm persistently low demand and cost pressure in the economy. This is accompanied by a further decline in inflation expectations of households, the notice said.

In the opinion of the council, the incoming data point to weaker than expected economic growth in Poland and a stronger - than forecasted in the March projection - decline in inflation.

At the same time, uncertainty about the scale and timing of the expected economic recovery in the euro area persists, which can adversely affect economic activity in Poland.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.