Monetary Policy Council leaves interest rates unchanged

In October 2021, the Monetary Policy Council began what later turned out to be a long series of increases in interest rates. As a result, the main, reference interest rate has increased from 0.1% to 6.75%. However, in October and November of 2022, and now also in December, the Council decided to leave the NBP interest rates as they were.

At a meeting held on Wednesday (December 7), the Council decided to keep the NBP interest rates unchanged:

- reference rate at 6.75%;

- lombard rate at 7.25%;

- deposit rate at 6.25%;

- rediscount rate at 6.80%;

- discount rate at 6.85%.

"Inflation in Poland – according to Statistics Poland flash estimate – decreased in November 2022 to 17.4% y/y. The decrease in CPI in year-on-year terms compared to October was driven by lower growth in prices of energy carriers and fuels. Inflation remains at a high level, which – to a great extent – stems from a gradual pass-through of high commodity prices to consumer prices. High commodity prices have been reflected in rising food and energy prices, and, at the same time, they have boosted operating costs of enterprises, which – given the still relatively strong demand – inclined firms to raise prices of goods, contributing to higher core inflation. Core inflation has been also driven by the persisting effects of the disruptions to global supply chains, although they are gradually easing. In turn, the Anti-inflationary Shield continued to limit CPI inflation," the Monetary Policy Council said in a statement published on Wednesday.

"The Council assessed, that the expected weakening of the external economic conditions, together with monetary policy tightening by major central banks, will curb global inflation and commodity prices. The weakening of the global economic conditions will also hamper GDP growth in Poland. Under such circumstances, the hitherto significant monetary policy tightening by NBP will support a decline in inflation in Poland towards the NBP inflation target. At the same time, given strength and persistence of the current shocks that remain beyond the impact of domestic monetary policy, in the short term inflation will remain high, and its return to the NBP inflation target will be gradual. 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," we read.