The Monetary Policy Council of National Bank of Poland kept the interest rates on hold today. The reference rate was maintained at 1.5 percent, while the lombard rate was kept on hold at 2.5 percent. The deposit rate was kept at 0.5 percent, while the re-discount rate was maintained at 1.75 percent.
The global economic conditions continue to rebound. The council stated that the data in euro area hint at additional rebound in economy, driven by a rebound in the labor market conditions, very good confidence of economic agents, and stronger world trade growth. Also, the U.S. economic conditions continue to be favorable.
In spite of the ongoing global recovery, inflation abroad continues to be moderate, owing to the persistently low domestic inflationary pressures in several nations. Meanwhile, prices of certain commodities, including oil, have increased in recent months. The European Central Bank keeps interest rates close to zero, including the deposit rate below zero while still purchasing financial assets. The U.S. Fed hiked its interest rates in December and continues to shrink its balance sheet.
Meanwhile, incoming data in Poland indicate towards continued good economic conditions. Growth continues to be driven mainly by consumer demand, underpinned by rising employment and wages, disbursements of benefits and very good consumer sentiment. This is accompanied by a rebound in investment, mainly in the public sector. Economic activity growth is also underpinned by robust external demand, reflected in considerable exports growth.
Annual inflation dropped and is currently at moderate level. Meanwhile, core inflation continues to be low. In the Council’s assessment, favorable economic conditions in the Polish economy would continue in the coming quarters. However, GDP growth is expected to be lower than in the second half of 2017. Taking into account the current information, the Council expects that inflation in Poland will remain close to the inflation target over the projected horizon.
“As a result, the current level of interest rates is conducive to keeping the Polish economy on the sustainable growth path and maintaining macroeconomic stability”, stated the Council.
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