NBP MPC Press Release - 2020-03-17
Central bank: nbp | Type: decision | Date: 2020-03-17

Warsaw, 17 March 2020 
Information from the meeting of the Monetary Policy Council 
held on 17 March 2020 
The Council decided to cut the NBP reference rate by 0.5 percentage points, i.e. to 1.00%. 
At the same time, the Council set the remaining NBP interest rates at the following 
levels: 
 
▪ lombard rate at 1.50%; 
▪ deposit rate at 0.50%; 
▪ rediscount rate at 1.05%; 
▪ discount rate at 1.10%. 
 
Moreover, the Council decided to decrease the required reserve ratio from 3.5% to 0.5% 
and to increase the remuneration of the required reserves from 0.5% to the reference 
rate level. 
 
At the beginning of the year the global economy grew at relatively slow, albeit stable 
pace. Due to the spread of coronavirus the global economic outlook has recent ly 
substantially deteriorated. Measures introduced in many countries to counteract the 
further spread of coronavirus, including restrictions imposed on transport and services 
sector, along with falling consumer and business confidence weaken the current activity 
in many economies. The latest forecasts indicate an improvement in economic conditions 
further ahead, although its pace will depend on effectiveness of epidemic containment 
measures as well as the impact of current disruptions on the economic agent’ s incomes 
and sentiment in the longer run. 
In these circumstances many countries has announced – apart from measures directly 
aimed at limiting the spread of the virus – the introduction of fiscal measures to contain 
economic losses related to coronavirus and temporary suspension of business activity. 
Due to the deteriorating outlook and increased uncertainty about the durability of 
coronavirus economic impact, the financial markets sentiment has also deteriorated in 
recent days. It has been accompanied by considerable fall in global oil prices. 
The major central banks has substantially eased their monetary policy. The US Federal 
Reserve lowered interest rates, bringing them close to zero, restarted asset purchases and 
increased the liquidity in the financial market. Due to already negative interest rates, the 
European Central Bank eased monetary conditions by , inter alia, increasing the scale of 
liquidity provision and asset purchases. Many other central banks cut interest rates. 
In Poland, e conomic conditions in the first months of the year were relatively 
favourable. However, coronavirus epidemic, due to its detrimental impact on sentiments, 
together with measures limiting its' spread – will curtail economic activity in some sectors 
 
 
in the s hort run. These effects might be amplified by simultaneous slump in economic 
activity in many countries. At the same time, further ahead, they will probably be 
mitigated by stimulus packages introduced in many countries. 
Inflation in Poland stood at 4.7% y/y in February 2020. Expected economic slowdown 
in the nearest future together with the significant fall in global oil prices will contribute to 
marked decrease in inflation. Consequently, latest forecasts indicate a higher probability 
of inflation decreasing more quickly in 2020 than anticipated in the March projection and 
of inflation falling below the NBP inflation target in the monetary policy transmission 
horizon. In these circumstance, the Council decided to cut the NBP interest rates. 
At the same time, in order to limit the risk of current economic disruption weighing on 
credit supply, the Council cut the required reserve ratio from 3.5% to 0.5% and increased 
the remuneration of required reserves from 0.5% to the reference rate level. 
Moreover, in accordance with Monetary policy guidelines for 2020 , to limit the risk of 
tensions in domestic financial market, NBP will provide liquidity to the banking sector 
using repo transactions. NBP will also purchase government bonds on the secondary 
market as part of the structural operations that change the long-term liquidity structure in 
the banking sector and contribute to maintaining the liquidity in the government bond 
secondary market. Furthermore NBP will offer bill discount credit aimed at r efinancing 
new loans granted to economic entities by banks. 
In the Council's assessment, all the above -mentioned measures will mitigate the 
negative economic impact of coronavirus spread, while further ahead they will contribute 
to recovery in domestic ec onomic activity and will be conducive to inflation running at 
the level of the NBP inflation target in the medium term.