Poland’s central bank keeps interest rates unchanged
Poland’s central bank, the National Bank of Poland (NBP) kept its interest rates steady on Wednesday.
The Monetary Policy Council judges that the current level of the NBP interest rates is conducive to meeting the NBP inflation target in the medium term
The Council decided to keep reference rate at 5.75 per cent, lombard rate at 6.25 per cent, deposit rate at 5.25 per cent, rediscount rate at 5.80 per cent, and discount rate at 5.85 per cent.
Poland’s economy continued to recover in August 2024, with retail sales increasing compared to the previous year. However, industrial production and construction output declined. The labour market remained strong, with low unemployment and high employment levels, although enterprise sector employment decreased. Wage growth remained high.
Inflation rose to 4.9 per cent in September 2024, driven primarily by increases in administered energy prices and, to a lesser extent, food and non-alcoholic beverage prices. Core inflation (excluding food and energy) also increased but remained lower than overall CPI inflation. Producer prices continued to fall in August.
Despite the economic recovery, demand and cost pressures in Poland remain relatively low. This, combined with weakened global economic conditions and lower inflation abroad, is helping to curb domestic inflation. The appreciation of the zloty exchange rate is also constraining inflation. However, strong wage growth, particularly in the public sector, is stimulating price pressures. Rising energy prices will continue to affect inflation in the coming quarters.
The Council assesses that inflation should return to the NBP’s medium-term target once the effects of energy price increases fade, assuming current interest rates remain unchanged. However, inflation expectations could be influenced by higher energy prices. Future fiscal and regulatory policies, the pace of economic recovery, and labour market conditions will also impact inflation developments in the medium term.
Attribution: The National Bank of Poland
