NBP MPC Press Release - 2011-10-05
Central bank: nbp | Type: decision | Date: 2011-10-05

National Bank of Poland 
 
Monetary Policy Council 
 
00-919 Warszawa, ul. Świętokrzyska 11/21, tel. (22) 653 28 88, fax (22) 653 13 28 
 
 
 
Warsaw, 5 October 2011 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
held on 4-5 October 2011 
The Council decided to keep the NBP interest rates unchanged, i.e.: 
 reference rate at 4.50% on an annual basis; 
 lombard rate at 6.00% on an annual basis; 
 deposit rate at 3.00% on an annual basis; 
 rediscount rate at 4.75% on an annual basis. 
 
Since the previous meeting of the Council, there have been further signs of weaker global economic 
activity. Data on the US economy point to continued slow economic growth. Similarly, in the euro 
area and in some emerging economies business conditions deteriorated as compared to the previous 
quarters. At the same time, economic growth forecasts for many countries were revised downwards, 
whereas inflation remains elevated. 
 
The heightened risk of a globa l economic slowdown along with the persisting fiscal problems in 
some countries give rise to e nduring tensions in the financia l markets worldwide. Given the 
increased risk aversion in the global financial markets, the cu rrencies of emerging economies, 
including the zloty, weakened. Th e higher volatility of financial asset prices was still driven by 
ample liquidity in the global financial markets, c onnected with the strongly expansionary monetary 
policy of the major central banks. 
 
According to the released data on the Polish economy the past few months have seen a deterioration 
in business indicators, which si gnals a possible decline in business activity. At the same time, 
growth in industrial output and retail sales accelerated in August 2011, whereas the upward trend in 
construction eased somewhat. Data from the enterpri se sector point to continued moderate growth 
in wages, amidst a concurrent decline in employment. At the same time, the unemployment rate 
remains at an elevated level. Le nding to enterpri ses, including investment loans, is rising although 
at a slower pace than earlier. The relatively fast growth in mortgage lending to households has also 
been sustained, while consumer loans continue to decline in annual terms. 
 
In August, annual CPI inflation increased to 4.3% , remaining markedly above the NBP's inflation 
target of 2.5%. Higher inflation was related to an increase in the prices of telecommunication 
services, which also contributed to higher core in flation, and to higher energy prices. At the same 
time, the PPI inflation accelerated. Inflation expectations of households and enterprises declined. 
 
 
 
 
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In the coming months, annual CPI inflation will conti nue to run at an elevated level, primarily due 
to the previously observed sharp rise in global commodity prices. 
 
In the medium term, inflation will be curbed by the anticipated decline in domestic economic 
growth amidst fiscal tightening, including reduced public investment spending, and interest rate 
increases implemented in the first half of 2011, as well as a likely global economic slowdown. On 
the other hand, the impact of the situation in the global financial markets on the zloty exchange rate 
constitutes an upside risk factor to domestic price developments. 
 
In the opinion of the Council, the significant m onetary policy tightening implemented since the 
beginning of 2011 should enable inflation to return to the target in the medium term. Given the 
above, the Council decided to keep the NBP interest rates unchanged. The Council does not rule out 
the possibility of further monetary policy adjustment s, should the outlook for inflation returning to 
the target deteriorate. 
 
In the recent period the Nationa l Bank of Poland sold some amount of foreign currencies in 
exchange for zlotys. Such transactions were cons istent with the pursued monetary policy strategy 
defined in the Monetary Policy Guidelines.