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Press conference after the meeting of the Monetary Policy Council held on 9 November 2011

Date: 09-11-2011

The Monetary Policy Council has upheld its stance that the monetary policy tightening of the first half of 2011 will enable inflation to return to the target in the medium term.

At its meetings held on 8 and 9 November, the Monetary Policy Council decided to keep interest rates unchanged. The reference rate remains at 4.5% in annual terms.

In the press release outlining the rationale for this decision, the MPC said, among others: “In the opinion of the Council, in the medium term inflation will be curbed by somewhat lower domestic economic growth amidst fiscal tightening, including reduced public investment spending, and interest rate increases implemented in the first half of 2011, as well as the expected global economic slowdown. (…) In the opinion of the Council, the monetary policy tightening implemented in the first half of 2011 will enable inflation to return to the target in the medium term”.

The conference following the MPC meeting was headed by Professors Marek Belka, Anna Zielińska-Głębocka and Adam Glapiński who were asked, among others, whether the Council had taken into account the recent interest rate cut by the European Central Bank. The NBP President, Professor Marek Belka, explained that the Council pursues an independent policy in view of the conditions in the Polish economy. Unlike the euro area, Poland is not expected to experience an equally sharp slow-down. Moreover, the volatility of the zloty exchange rate is higher than that of the euro and a depreciating national currency does not help in combating inflation.

Most of the questions concerned threats related to a large share of foreign ownership in the Polish banking system. The NBP President emphasised that the model adopted in the privatisation of Polish banks was appropriate. Contrary to some concerns, banks’ foreign owners remained loyal to the host market in 2008-2009. Owing to this, Polish banks are strong and safe today; they have adequate capital and are free from toxic assets. So far, bank monitoring carried out by Polish institutions has not identified any alarming developments. However, Professor Belka pointed out that increasing Polish ownership of the banking sector would be beneficial.

During the meeting, the Council acquainted themselves with the “Projection of inflation and GDP”, which is developed by the Economic Institute of the NBP three times a year and constitutes one of the inputs to the MPC decision-making process. In the MPC information, the Council quoted the following findings of the projection: “In line with the November projection – under the assumption of constant NBP interest rates – there is a 50-percent probability of inflation running in the range of 3.9-4.2% in 2011 (as compared to 3.7-4.4% in the July projection), 2.5-3.9% in 2012 (as compared to 2.1-3.4%) and 2.2-3.7% in 2013 (as compared to 1.8-3.4%). In turn, with a 50-percent probability the November projection sees the annual GDP growth in the range of 3.7-4.3% in 2011 (as compared to 3.0-4.9% in the July projection), 2.0-4.1% in 2012 (as compared to 1.9-4.5%) and 1.5-4.0% in 2013 (as compared to 1.5-4.3%).

The projection will be presented at the NBP conference on Tuesday, 16 November at 10.00 am.

  Press release from the meeting of the Monetary Policy Council held on 8-9 November 2011

Recording of the Monetary Policy Council press conference (mp3, 28 MB)

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