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Poland maintains reference rate at 1½%, keeps other rates unchanged
By Marisa Wong
Morgantown, W.Va., Jan. 14 – 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.
The bank reported that stable economic growth continues in Poland, driven primarily by domestic demand. The growth in demand is supported by a robust labor market, optimistic consumer sentiment and the good financial condition of enterprises.
However, demand growth is curbed by enterprises’ uncertainty about the outlook for economic growth abroad, the council pointed out.
Due to the sustained negative output gap and only moderate wage growth in the economy, there is no inflationary pressure in the economy.
The annual growth rates of consumer prices and producer prices remain negative, although the scale of deflation is gradually declining. Falling energy commodity prices in the global markets are the main driver behind continuing deflation. Inflationary expectations are still low, the bank noted.
The council said it believes price growth will increase slowly in the coming quarters, but due to renewed decline in commodity prices, consumer price growth may be lower than anticipated. So far, the continuing deflation has not had a negative impact on the decisions of economic agents, the bank said.
Gradual increase in price growth will be supported by closing of the output gap amid improving economic conditions in the euro area and a tight domestic labor market, the council added.
As a result, the council decided to keep the rates unchanged.
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