NBP MPC Press Release - 2010-06-30
Central bank: nbp | Type: decision | Date: 2010-06-30

National Bank of Poland 
 
Monetary Policy Council 
 
ul. Świ ętokrzyska 11/21, 00-919 Warszawa, Poland, phone (48 22) 826 99 55, fax (48 22) 826 37 51, 
 
 
Warsaw, 30 June 2010 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
held on 29-30 June 2010 
The Council decided to keep the NBP interest rates unchanged, i.e. 
 reference rate 3.50% on an annual basis; 
 lombard rate 5.00% on an annual basis; 
 deposit rate 2.00% on an annual basis; 
 rediscount rate 3.75% on an annual basis; 
 discount rate 4.00% on an annual basis. 
 
Further signals of recovery can be seen in th e world economy. However, the rate of economic 
growth varies across regions. 
The recovery in the United States has continue d, even though some economic activity indicators 
(including the latest data on GDP growth in 2010 Q1 , the real estate market and retail sales) have 
deteriorated in this country in the recent period. At the beginni ng of 2010 Q2 the level of economic 
activity in the euro area proved higher than in Q1. However, the slight worsening in the business 
climate indicators in subsequent months may be si gnalling the slower pace of activity improvement 
in this region. The short-term growth outlook for the euro area is negatively affected by the 
uncertainty regarding the pace of reducing public finance imbalance in the region, including the 
uncertainty connected with the fiscal crisis in Greece. 
At the same time, fast economic growth is c ontinuing in the largest emerging economies. The 
ensuing risk of a significant deepening of econo mic imbalance as a result of the economic boom 
leads to a gradual tightening of macroeconomic policy in these countries. 
Disruptions in the international financial markets, connected with the uncertainty as to the reduction 
of fiscal imbalances in some of euro-area countries, continued. Th e scale of those disruptions has 
nevertheless decreased recently, which has contributed to halting the fall in prices of some financial 
assets. 
The data on the Polish economy indicate a stabilis ation of the rate of economic growth. Robust 
increase in industrial output co ntinued. Following a strong declin e at the beginning of the year, 
construction output is also gradually increasing. In May retail sales rose as well. Employment 
growth in the enterprise sector (for the first time since January 2009 also in year-on-year terms) and 
stabilisation of the unemploymen t rate (in seasonally adjusted terms) observed in May 2010 are 
signs of a gradual improving labour market situati on. At the same time, in May 2010 real wages in 
the enterprise sector increased (i n year-on-year terms) for the th ird consecutive month. The growth 
of loans to households stabilised at a moderate level. The investment activity of enterprises is still 
limited and will probably remain so in the quart ers to come, especially because the production 
capacity utilisation in enterprises – though rising – remains low. No revival in lending to the 
 
 
 
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corporate sector can be seen, which is characte ristic amid a low investment activity and good 
financial situation of enterprises, including their good liquidity standing. 
In May 2010 the annual CPI inflation fell back again (to 2.2%), running below to the NBP's 
inflation target of 2.5%. This decline in CPI infla tion was mainly connected with a decrease in core 
inflation. In the coming period, in flation will be further lowered by negative base effects stemming 
from a strong increase in the prices of excise goods in 2009. 
The Council has got acquainted with the projection of inflation and GDP prepared by the Economic 
Institute of the NBP, which is one of the inputs into the Council’s decision-making on the NBP 
interest rates. In line with the June projection – under the assumption of constant NBP interest rates 
– there is a 50-percent probability of inflation running in the range of 2.3-2.9% in 2010 (compared 
to 1.3-2.2% in the February projection), 2.1-3.3% in 2011 (compared to 1.7-3.1%) and 2.2-3.7% in 
2012 (compared to 2.6-4.6%). In tu rn, the June projection sees th e annual GDP growth with a 50-
percent probability in the range of 2.5-3.9% in 2010 (compared to 2.1-4.1% in the February 
projection), 3.3-5.9% in 2011 (c ompared to 1.8-4.0%) and 2.2- 5.0% in 2012 (compared to 1.9-
4.3%). 
The Council has discussed factors that may fuel inflationary pressures in the medium term. 
An important factor affecting mone tary policy is the situation of public finance, especially in the 
face of changing attitude in ma ny European countries to high budget deficits and growing public 
debts. Introducing decisive measures aimed at permanently reducing the deficit of the general 
government sector and at curbing the increase of the public debt is necessary for macroeconomic 
stability and will allow the meeting of euro adoption criteria. 
The Council maintains its view that Poland should jo in the ERM II and the euro area at the earliest 
possible date, after meeting the necessary legal, economic and organisational conditions. 
The Council has adopted the Inflation Report – June 2010.