NBP MPC Press Release - 2020-05-28
Central bank: nbp | Type: decision | Date: 2020-05-28

Warsaw, 28 May 2020 
Information from the meeting of the Monetary Policy Council 
held on 28 May 2020 
The Council decided to cut the NBP reference rate by 0.40 percentage points, i.e. to 
0.10%. At the same time, the Council set the remaining NBP interest rates at the 
following levels: 
 
▪ lombard rate at 0.50%; 
▪ deposit rate at 0.00%; 
▪ rediscount rate at 0.11%; 
▪ discount rate at 0.12%. 
 
NBP will also continue to purchase government securities and government-
guaranteed debt securities on the secondary market as part of the structural operations. 
The timing and scale of the operations will depend on the market conditions. 
Furthermore, NBP will offer bill discount credit aimed at refinancing loans granted 
to enterprises by banks. 
 
The incoming data confirm that the COVID-19 pandemic contributed to a fall in global 
economic activity. In the economies of Poland’s main trading partners this was mirrored 
by falling GDP in 2020 Q1 as well as a significant drop in industrial production and retail 
sales in April. It was accompanied by deteriorating labour market situation and sharp 
weakening of consumer and business sentiment. In order to miti gate the negative 
economic effects of the pandemic, fiscal measures have been introduced to alleviate the 
fall in households’ and enterprises’ income as well as to stimulate economic activity. At 
the same time monetary policy has been eased by – inter alia – lowering interest rates and 
pursuing asset purchases. 
Recent forecasts indicate that in the second half of 2020 global economic conditions 
should improve, but the level of activity will be lower than before the pandemic . At the 
same time, there is uncertainty regarding the pace and robustness of the improvement in 
global economic conditions in the following quarters. As a consequence, the situation in 
the financial markets remains volatile, although the volatility is being mitigated by 
monetary policy easing conducted by major central banks. 
The weakening of current and expected demand leads to falling prices of many 
commodities. The prices of energy commodities , as well as some food commodities are 
lower than at the beginning of the year, contributing – together with weaker economic 
activity – to slower price growth in many countries, including main trading partners of 
Poland. 
 
 
 
 
In Poland, economic conditions in the first months of the year were relatively 
favourable, but GDP growth on an annual basis decelerated. April data point to a 
significant fall in economic activity, a decrease in wages and employment in enterprises 
as well as a deterioration of consumer and business sentiment. At the same time inflation 
declined markedly and the annual change in producer prices was negative. 
As the restrictions related to the pandemic are lifted, a recovery in economic activity 
could be expected. This would be supported by economic policy measures, including 
monetary policy easing by NBP, that mitigate the fall in employment, supporting incomes 
of households and financial situation of enterprises. The scale of the expected recovery 
could be – in turn – curbed by uncertainty regarding the consequences of the pandemic, 
lower incomes and weaker sentiment of economic agents than in previous years. 
Weaker activity in the global economy, inc luding in Poland, together with lower 
commodity prices in international markets will contribute to a further decrease in 
inflation. Consequently, the risk of inflation falling below the NBP inflation target in the 
monetary policy transmission horizon preva ils. Considering the above -mentioned 
circumstances, the Council decided to cut the NBP interest rates again. 
NBP will also continue to purchase government securities and government-guaranteed 
debt securities on the secondary market as part of the s tructural operations . These 
operations are aimed at changing the long-term liquidity structure in the banking sector, 
ensuring the liquidity in secondary markets for the purchased securities and enhancing 
the impact of the NBP interest rat e cuts on the economy, i.e. strengthening the monetary 
policy transmission mechanism. The timing and scale of the operations will depend on the 
market conditions. 
Furthermore NBP will offer bill discount credit aimed at refinancing loans granted to 
enterprises by banks. 
The NBP monetary policy easing mitigates the negative economic impact of the 
pandemic, limiting the scale of the economic activity fall and supporting income s of 
households and enterprises. Consequently, it alleviates the fall in employment and 
deterioration of financial situation of enterprises, thus being conducive to quicker 
recovery after the abatement of the pandemic. The measures undertaken by NBP reduce 
the risk of inflation falling below the NBP inflation target in the medium term and – due 
to their positive impact on financial situation of debtors -- are conducive to enhancement 
of financial system stability.