NBP keeps interest rates unchanged 10th month in a row

On 5-6 July 2023 the Monetary Policy Council (MPC) held a decision-making meeting at which it decided to keep the NBP interest rates unchanged:

The main reference interest rate has been kept at the unchanged level of 6.75% for the 10th month in a row - since September 8, 2022.

The decision made by the MPC in July corresponds with forecasts prepared by economy experts, many of whom agree the interest rates will be decreased in the second half of the year at best. September and November are the two most often mentioned months in that context. Some economists, however, maintain that required conditions for lower interest rates will come no sooner than next year.

In the MPC press release, the Council argues that "the weakening of the external economic conditions, together with a decline in commodity prices, will continue to curb global inflation, which will still contribute to lower price growth in Poland". "The decline in domestic inflation will be supported by a weakening of GDP growth, including consumption, amid a significant decrease in credit growth," it added.

"The Council assesses that the strong monetary policy tightening undertaken by NBP is leading to a decline in inflation in Poland towards the NBP inflation target. At the same time, given the strength and persistence of the earlier shocks, which remain beyond the impact of domestic monetary policy, the return of inflation to the NBP inflation target will be gradual," we read.

The MPC added that "decrease in inflation would be faster if supported by an appreciation of the zloty exchange rate, which, in the Council’s assessment, would be consistent with the fundamentals of the Polish economy".