National Bank of Poland keeps interest rate on hold

The National Bank of Poland kept the interest rates on hold today. The reference rate was kept at 1.50 percent, while the deposit rate was on hold at 0.50 percent. The Lombard rate and rediscount rate was kept at 2.50 percent and 1.75 percent, respectively.

The central bank’s statement mentioned that the preliminary GDP data for the third quarter indicate towards a solid economic conditions. GDP growth is still driven by increasing consumption that is boosted by increasing employment and wages as well as very high consumer confidence.

In the third quarter, this was accompanied by a market rise in investment. In the midst of relatively high growth of domestic demand and the softening of economic conditions in Poland’s external environment, net exports had a negative contribution to GDP growth.

Notwithstanding relatively high economic growth and wages rising faster than in the earlier year, annual consumer price growth has dropped and continues to be moderate. Meanwhile, inflation net of food and energy prices remain low. In the Council’s assessment, current inflation indicates towards a comparatively favourable outlook for economic conditions in Poland, although a gradual deceleration in GDP growth is likely in the coming years.

Inflation is likely to accelerate next year, owing to rising energy prices. In the medium term, the expected deceleration in economic growth will have a dampening impact on inflation. The statement mentioned that consequently, in the monetary policy transmission “inflation will remain 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”.