NBP MPC Press Release - 2012-11-07
Central bank: nbp | Type: decision | Date: 2012-11-07

N a t i o n a l B a n k o f P o l a n d 
M o n e t a r y P o l i c y C o u n c i l 
 
 
 
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w w w . n b p . p l / r p p 
 
Warsaw, 7 November 2012 
 
INFORMATION FROM THE MEETING OF THE MONETARY 
POLICY COUNCIL 
held on 6-7 November 2012 
The Council decided to decrease the NBP interest rates by 0.25 percentage points: 
 reference rate to 4.50% on an annual basis; 
 lombard rate to 6.00% on an annual basis; 
 deposit rate to 3.00% on an annual basis; 
 rediscount rate to 4.75% on an annual basis; 
Incoming data indicate that global economic activity remained subdued in 2012 Q3. In the 
euro area, economic growth was probably close to zero, an d in the United States, despite 
some rebound, remained moderate. At the same time, following several quarters of economic 
slowdown, growth in the largest emerging economies probably stabilised at a relatively low 
level. Even though weak economic activity a cross the world contributes to a decline in 
inflation, still relatively high commodity prices are conducive to inflation remaining elevated 
in many countries. 
Following the earlier improvement, the international financial market sentiment has 
deteriorated slightly. At the same time, some central banks have lowered their policy rates. 
In Poland, both industrial output and retail sales (in real terms) declined in September, while 
the fall in construction and assembly output deepened. Economic activity data w ere worse 
than expected and reflected further economic slowdown in 2012 Q3. Furthermore, labour 
market figures, including continued decline in employment, slower wage growth in the 
enterprise sector and gradually rising unemployment rate, point to a lack of wage pressure and 
likely further weakening in private demand. This is also confirmed by deteriorating of most 
business indicators. 
The economic slowdown is accompanied by a gradual deceleration in lending to households, 
including a further d ecrease in the consumer loans, as well as slower growth in corporate 
lending. 
In September, CPI inflation was 3.8%, remaining above the NBP's inflation target of 2.5%. At 
the same time , both core inflation and producer price growth continued to decline , which 
confirms that demand pressure is weakening. Household and corporate inflation expectations 
also declined in the recent months . 
The Council got acquainted with the inflation and GDP projection prepared by the Economic 
Institute, being one of the inputs to the Council's decisions on the NBP interest rates. 
2 
 
In line with the November projection based on the NECMOD model – assuming unchanged 
NBP interest rates – there is a 50 -percent probability of inflation running in the range of 3.7-
3.9% in 2012 ( as compared to 3.6 -4.2% in the July projection), within 1.8-3.1% in 2013 (as 
against 2.0 -3.4%) and between 0.7-2.4% in 2014 (as against 1.0 -2.7%). The annual GDP 
growth – in line with the November projection – will be , with a 50 -percent probability, 
contained within 2.0-2.6% in 2012 ( as compared to 2. 3-3.6% in the July projection), within 
0.5-2.5% in 2013 (as against 1.0-3.2%) and within 1.1-3.5% in 2014 (as against 1.7-4.2%). 
In the opinion of the Council, incoming data confirm a considerable economic slowdown in 
Poland, whic h contains wage and inflationary pressure. At the same time, in line with the 
November projection prepared under the assumption of constant NBP interest rates, GDP 
growth will remain below potential in the coming years. According to the projection, inflation 
will return to the target in the coming quarters, and might fall below the target in the medium 
term. 
Therefore, the Council decided to lower the NBP interest rates. The decrease in the interest 
rates should support economic activity and thus reduces the risk of inflation falling below the 
target in the medium term. 
Should the incoming information confirm a protracted economic slowdown , and should the 
risk of increase in inflationary pressure remain limited, the Council will further ease monetary 
policy. 
The Council adopted the Inflation Report - November 2012.