National Bank of Poland keeps policy rate on hold, outlook of economic conditions remains favourable

The National Bank of Poland’s Council decided to keep the interest rates on hold today. The reference rate, Lombard rate, deposit rate and rediscount rate was kept unchanged at 1.50 percent, 2.50 percent, 0.50 percent and 1.75 percent, respectively.

In its press release, the central bank stated that the incoming data affirm a softening in some of the largest economies, in the midst of persistent uncertainty regarding the outlook for global activity in the quarters ahead. Information on the euro area indicates continued low economic growth in this regions at the start of the year. In the U.S., economic conditions continue to be good, although GDP growth possibly decelerated in the first quarter of 2019. Chinese activity growth continues to slowdown gradually. In spite of a rise in global oil prices at the start of 2019, their current level is still lower than in the third quarter of 2018.

Polish economic conditions continue to be good, although incoming data show that the GDP growth in the first quarter of 2019 is likely slower than in the prior quarter. Activity growth is driven by increasing consumption, boosted by rising employment and wages as well as very high consumer sentiment. This is accompanied by an increase in investment.

Notwithstanding comparatively high economic growth and wages rising more rapid than in previous years, annual consumer price growth continues to be at a low level. Inflation net of food and energy prices also continues to be low, in spite of some rise in recent months.

The press release stated that “in the Council's assessment, the outlook for economic conditions in Poland remains favourable. However, in the quarters to come, there will probably be a gradual slowdown in GDP growth. At the same time, inflation will remain at a moderate level and, in the monetary policy transmission horizon, will stay close to the target. The Council judges that the current level of interest rates is conducive to keeping the Polish economy on a sustainable growth path and maintaining macroeconomic stability”.