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Poland keeps reference rate at 1½%, with price growth still negative
By Marisa Wong
Madison, Wis., June 3 – National Bank of Poland’s Monetary Policy Council voted to keep the reference rate at 1½%, the Lombard rate at 2½%, the deposit rate at ½% and the rediscount rate at 1¾% at its meeting on Tuesday and Wednesday, according to a bank news release.
In the opinion of the council, annual price growth will remain negative in the coming months, mainly due to a sharp fall in commodity prices.
At the same time, the council decided to keep the rates unchanged because it expects economic growth to gradually accelerate, reducing the risk of inflation remaining below the target in the medium term.
In Poland, real GDP growth accelerated in the first quarter, to 3.6% from 3.3% in the fourth quarter of 2014, according to a bank release on Wednesday.
Increase in domestic demand, fuelled by an improving labor market situation, good financial condition of enterprises and stable expansion in lending, is still the main driver of economic growth, the council said.
Economic recovery has also been spurred by accelerating exports, supported by improvement in economic activity in the euro area.
However, April saw a decline in industrial output growth and retail sales growth, although this was most likely temporary, the council remarked.
Due to the moderate growth in demand and continuing negative output gap, there is no demand pressure in the economy, the council said. At the same time, low commodity prices and moderate nominal wage growth are contributing to the continuing lack of cost pressure. As a result, the annual growth rate of consumer and producer prices remains negative, and the council’s inflation expectations continue to be very low.
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