Poland’s central bank again keeps reference rate at 2%, Lombard at 3%

By Marisa Wong

Madison, Wis., Jan. 14 – National Bank of Poland’s Monetary Policy Council voted to keep the reference rate unchanged at 2%. The rate was lowered from 2½% in October.

The council meeting was held on Tuesday and Wednesday.

The Lombard rate also stayed at 3%, and the bill rediscount rate remains 2¼%. Those rates had been lowered in October from 4% and 2¾%, respectively.

According to a news release, the deposit rate stayed unchanged at 1%.

The council said it decided to keep the interest rates unchanged, pointing out that uncertainty related to economic conditions surrounding the Polish economy persists.

The council said, however, that if the expected period of deflation extends, which would increase the risk of inflation remaining below the target in the medium term, and incoming data confirm a slowdown in economic activity as well as continuing weak growth around the Polish economy, it may make adjustments to the monetary policy.

The bank reported that CPI inflation in November was below expectations, at negative 0.6% year over year. This was accompanied by a decrease in core inflation indices, which confirms the absence of demand pressure in the economy.

The continued decline in producer prices points, in turn, to a lack of cost pressure. This is accompanied by very low inflation expectations of enterprises and households, the council said.

In Poland, fourth-quarter economic activity growth may have slowed down slightly, the release noted. In November, industrial output growth decreased to near-zero levels, while construction and assembly output continued to fall. At the same time, retail sales growth decreased. Growth in bank lending – both to enterprises and households – continued at a steady pace, the bank reported.

Stable growth in consumption was accompanied by some acceleration in investment growth. Meanwhile, exports and imports growth slowed down. As a result, the contribution of net exports to GDP growth stayed negative, the council said.

The council also commented that global economic activity remains moderate, although the situation varies across countries. In the past month, oil prices continued to decline sharply. Along with moderate global economic growth, this contributes to very low inflation in many countries and deflation in Poland’s immediate environment, including the euro area.

© 2015 Prospect News.
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