Poland keeps reference rate at 1½%, maintains all other rates

By Toni Weeks

San Luis Obispo, Calif., July 8 – 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 an earlier sharp fall in commodity prices, according to a bank notice.

At the same time, the council decided to keep the rates unchanged because it expects economic growth to remain stable amid recovery in the euro area and a good situation in the domestic labor market, reducing the risk of inflation remaining below the target in the medium term.

In Poland, GDP growth in the second quarter of 2015 most likely continued at the level the previous quarter, the bank said. GDP had accelerated in the first quarter, to 3.6% from 3.3% in the fourth quarter of 2014, as previously reported.

Growth of global economic activity remains moderate. In the euro area, economic conditions are improving gradually, though activity is still low. In the United States, data suggest that the slowdown at the beginning of the year was temporary, and the economic outlook is favorable.

Despite ongoing recovery in developed economies, the sentiment in the financial markets has recently deteriorated in the wake of growing fears of a Greek insolvency.

Due to the moderate growth in demand and continuing negative output gap, there is no inflationary 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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