NBP keeps interest rates on hold, affirms current level of rates favourable to keep economy on sustainable growth path

As expected, the National Bank of Poland’s Monetary Policy Council today kept its interest rates on hold. The central bank maintained the reference rate at 1.5 percent, lombard rate at 2.5 percent, deposit rate at 0.5 percent and rediscount rate at 1.75 percent.

The central bank stated that the GDP data indicate that the Polish economic growth accelerated in the first quarter of this year. NBP stated that the growth continues to be driven mainly by rising consumer demand, underpinned by rising employment and wages, very good consumer confidence and disbursement of benefits. This was accompanied by near-zero investment growth rate. According to the central bank, the leading economic indicators and the output and sales data, point towards stable economic growth in the second quarter of 2017.

It stated that the annual growth in prices of consumer goods and services continues to be at a moderate level, while core inflation, though gradually rising, remains low. Unit labor costs growth also continues to be modest.

The MPC stated that the signs of rebound in the global economy are strengthening, especially in industry and international trade. Euro area economic data shows ongoing recovery, current data of China does not indicate a sustained acceleration in economic activity. In spite of ongoing global rebound, inflation outside of Poland has steadied at a moderate level due to waning impacts of an earlier rise in commodity prices, including oil prices, along with low domestic inflationary pressure in several nations.

According to the MPC, Polish inflation in the quarters ahead would continue to be moderate in the midst of waning impacts of the past rise in prices of global commodity, with just gradual rise in domestic inflationary pressure stemming from rebounding domestic economic conditions. Consequently, the risk of inflation being constantly above the target in the medium term is limited.

The MPC has affirmed its assessment that, given the available data and projections, the current level of interest rates is favourable to maintaining the Polish economy on the sustainable growth path and keeping macroeconomic balance.