The National Bank of Poland yesterday decided to keep the interest rates on hold. The Monetary Policy Council decided to keep the reference rate at 1.5 percent, deposit rate at 0.5 percent, Lombard rate at 2.5 percent and the rediscount rate at 1.75 percent.

The central bank stated that the global economic growth continues to be moderate; however, forecasts for the global economy have been revised up recently. In Poland, the preliminary economic growth for 2016 showed that the fourth quarter annual economic growth pace was close to that registered a quarter earlier. Consumer demand, underpinned by increase in employment and wages, good consumer confidence and child benefit payments mainly drove the economic growth.

Net exports and increase in inventories also contributed positively to GDP growth. Meanwhile, decline in investment contracted. Lower rate of investment fell possibly due to higher use of EU funds under the new EU financial perspective. Recently, several countries saw the annual growth in prices of consumer goods and services increased. The price growth results from increased global commodity prices, such as factors beyond the direct impact of domestic monetary policy. Meanwhile, moderate growth in unit labor costs and the negative output gap in the domestic economy are containing inflationary pressure.

According to the MPC, price growth might stabilize in the quarters ahead following a rise in inflation in the initial months of the year. Annual inflation might rise due to the impacts of higher global commodity prices. External factors were mostly behind the rise in price growth along with low domestic demand pressure. The Council judges that the risk of inflation continuously coming above the target in the medium term is low.

The MPC affirmed that given the available data and projections, the current level of interest rates is helpful in keeping the Polish economy on the sustainable growth path and keeping macroeconomic balance.