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Conference following the March meeting of the Monetary Policy Council

Date: 11-03-2016

At its March meeting, the Monetary Policy Council decided to keep policy interest rates unchanged.

At the meeting held on 10 and 11 March, the Monetary Policy Council decided to keep the NBP interest rates unchanged. Thus, the reference rate continues at 1.50%, the lombard rate at 2.50%, the deposit rate at 0.50% and the rediscount rate at 1.75%.

“In the Council’s assessment, price growth will remain negative in the coming quarters due to the earlier strong fall in global commodity prices. At the same time, a gradual increase in core inflation is expected. It will be supported by stable economic growth, including an anticipated rise in consumer demand growth driven by rising employment, forecasted acceleration of wage growth and an increase in social benefits. This notwithstanding, the downside risks to the global economic conditions are a source of uncertainty for the domestic economy. The Council continues to assess that – given the available data and forecasts – the current level of interest rates is conducive to keeping the Polish economy on the sustainable growth path and maintaining macroeconomic balance,” the Council explained their decision in a release following the March meeting.

When asked about room for adjustments to the level of interest rates, Professor Marek Belka said that in the long-term neither an increase nor a reduction in interest rates can be ruled out: “We promised ourselves today that in the nearest future we will discuss more thoroughly what scenario of events both in the global economy and in Poland would incline us to raise or lower interest rates or – more mildly – to change our attitude. In other words, we did not rule out that in some perspective – which we did not define – a correction to monetary policy may be necessary. As a new collective body, we wanted to discuss what conditions would have to or should incline us to change our policy. However, this has nothing in common with an inclination to think about interest rate changes today.”

The NBP President also said that the Polish central bank is studying the effects of the ECB’s decisions. “We are observing the impact of the ECB's decisions on the behaviour of the market in Poland – on the exchange rate, but also on the demand for Treasury securities. We have observed the first results, but they were temporary and not too strong."

During the March meeting the Council became acquainted with the latest projection of inflation and GDP. In line with the projection – prepared under the assumption of unchanged NBP interest rates and taking into account data available until 22 February 2016 (projection cut-off date) – there is a 50-percent probability that the annual price growth will be in the range of -0.9 – 0.2% in 2016 (against 0.4 – 1.8% in the November 2015 projection), 0.2 – 2.3% in 2017 (compared to 0.4 – 2.5%) and 0.4 – 2.8% in 2018. At the same time, the annual GDP growth – in line with this projection – will be with a 50-percent probability in the range of 3.0 – 4.5% in 2016 (against 2.3 – 4.3% in the November 2015 projection), 2.6 – 4.8% in 2017 (compared to 2.4 – 4.6%) and 2.1 – 4.4% in 2018.

Apart from the MPC Chairman, the conference was attended by Dr Marek Chrzanowski and Dr Jerzy Kropiwnicki.

The next MPC meeting is scheduled for 5-6 April 2016.

NBP interest rates

Reference rate 6.75
Lombard rate 7.25
Deposit rate 6.25
Rediscount rate 6.80
Discount rate 6.85

Exchange rates

Table of 2023-02-03
1 EUR4.6920
1 USD4.2928
1 CHF4.7023
1 GBP5.2571
100 JPY3.3391

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