Monetary Policy Council leaves interest rates unchanged again

At the session held on March 7-8, the Monetary Policy Council (MPC) decided to keep the NBP interest rates unchanged:

- reference rate at 6.75% on an annual basis;

- lombard rate at 7.25% on an annual basis;

- deposit rate at 6.25% on an annual basis;

- rediscount rate at 6.80% on an annual basis;

- discount rate on bills of exchange at 6.85% on an annual basis.

March's decision to keep the interest rates unchanged is a sixth such resolution in a row. After a long series of increases, in October, 2022, the Council decided not to push further and left the rates unchanged for the first time.

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

The Council added that "the earlier strong monetary policy tightening undertaken by NBP will lead to a decline in inflation in Poland towards the NBP inflation target".

"At the same time, given strength and persistence of the recent shocks that remain beyond the impact of domestic monetary policy, the return of inflation to the NBP inflation target will be gradual. Such an assessment is supported by the March projection of inflation and GDP," we read.

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