Poland's Monetary Policy Council (MPC) has decided to decrease the NBP interest rates by 25 basis points - the Council said in a statement on Wednesday (Oct. 4). The main reference interest rate has been therefore reduced to 5.75%.
Economic experts surveyed ahead of the MPC October session expected a decrease in the reference rate by 25 basis points, down to 5.75%.
The Monetary Policy Council held a decision-making meeting on 3-4 October 2023.
The Council decided to decrease the NBP interest rates by 0.25 percentage points. The Council set the NBP interest rates at the following levels:
- reference rate at 5.75% on an annual basis;
- lombard rate at 6.25% on an annual basis;
- deposit rate at 5.25% on an annual basis;
- rediscount rate at 5.80% on an annual basis;
- discount rate on bills of exchange at 5.85% on an annual basis.
The resolution of the Monetary Policy Council will enter into force on 5 October 2023.
The NBP President Adam Glapiński is expected to hold a press conference regarding the latest MPc session on Thursday (Oct. 5).
This is the second decrease in interest rates in a row. In September, the MPC decided to reduce the NBP rates by 75 basis points.
"According to Statistics Poland flash estimate, annual CPI inflation in September 2023 markedly declined again, falling to a level of 8.2% y/y (compared to 10.1% y/y in August 2023). The decrease in inflation in annual terms was driven mainly by a fall in annual price growth of energy as well as food and non-alcoholic beverages. Taking into account the data by Statistics Poland, it can be estimated that core inflation also decreased again in September," the MPC said in a statement released following the decision.
"In August 2023 producer prices were again lower than a year before, which confirms the fading of most external supply shocks and a reduction of cost pressures. Together with the low economic activity growth, it will support a further decline in consumer price inflation in the coming quarters. The significant fall in inflation is accompanied by decreasing inflation expectations, which contributes to an increase in the restrictiveness of monetary policy," the statement added.
The Council assessed that "incoming data confirm weak demand and cost pressure in the economy as well as reduced inflation pressure amongst the weakened external economic conditions".
"Considering these circumstances – and taking into account the time lags in the monetary policy transmission to the economy – the Council adjusted the NBP interest rates, which is consistent with meeting the NBP inflation target in the medium term," we read.
"The Council upheld the assessment that the decrease in inflation would be faster if supported by an appreciation of the zloty exchange rate, which would be consistent with the fundamentals of the Polish economy."
Źródło: TVN24 News in English, nbp.pl
Źródło zdjęcia głównego: MOZCO Mateusz Szymanski/Shutterstock