NBP MPC Press Release - 2010-02-24
Central bank: nbp | Type: decision | Date: 2010-02-24

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, 24 February 2010 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
held on 23-24 February 2010 
The Council decided to keep the NBP interest rates unchanged, i.e. 
 reference rate at 3.50% on an annual basis; 
 lombard rate at 5.00% on an annual basis; 
 deposit rate at 2.00% on an annual basis; 
 rediscount rate at 3.75% on an annual basis; 
 discount rate at 4.00% on an annual basis. 
 
Released data point to a further increase in ec onomic activity in the United States and a slow 
improvement in economic conditions in the euro area. However, the labour market situation in the 
developed economies remains unfavourable, which is in line with expecta tions. Moreover, lending 
continues to shrink, though the difference betw een the share of banks tightening and those 
loosening their credit policies in the euro area ha s narrowed. At the same time, the largest emerging 
economies, including China, see their GDP growth accelerate. The recovery in economic activity 
around the world is still being supported by strongly expansi onary macroeconomic policies based 
on both conventional and non-standard instruments. 
In the recent period, the risk aversion in international financial markets has risen, which was largely 
related to fears about the effects of the fiscal problems in some of the euro-area economies. The rise 
in risk aversion contributed to de clines in prices of some financial assets. At the same time, oil 
prices remained highly volatile. Inflation incr ease in emerging market economies was accompanied 
with a slight rise in inflation in some of the developed economies. 
Preliminary GUS data on GDP in 2009 imply that 2009 Q4 saw further recovery of economic 
growth. The newest monthly data on the Polish economy also point to improved economic activity. 
Some stabilisation of employment in the enterprise sector may signal a gradual deceleration of the 
unfavourable labour market tendencies, though unemplo yment rate is still rising, which is largely 
driven by increasing labour force pa rticipation. The growth in lo ans to the non-financial sector 
remains low, though banks envisage higher lending to this sector in the coming period. 
According to GUS preliminary data, in January 2010 a nnual CPI inflation rose to 3.6%, i.e. slightly 
above the upper limit for deviations from the infl ation target of 2.5%. The rise in the annual 
inflation rate was primarily driven by higher annual rate of fuel prices, largely due to a positive base 
effect.
 
The Council 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 February projection – under the assu mption of constant NBP interest 
rates – there is a 50-percent probability that infla tion will remain within the range of 1.3–2.2% in 
 
 
 
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2010 (compared to 0.8–2.2% in the October projec tion), 1.7–3.1% in 2011 (compared to 1.1–3.2%) 
and 2.6–4.6% in 2012. According to the February projection, there is a 50-percent pr obability that 
the annual GDP growth will remain within the range of 2.1–4.1% in 2010 (compared to 0.8–2.8% 
in the October projection), 1.8–4.0% in 2011 (compared to 2.2–4.2%) and 1.9–4.3% in 2012. 
In line with available forecasts, in the months to come the annual CPI will be lowered by negative 
base effects connected with the surge in administ ered prices and food pri ces at the beginning of 
2009. Other factors conducive to lower inflation include: low demand pressure, previously observed 
moderate growth of labour costs and the hitherto observed zloty appreciation. In turn, inflation 
decline in 2010 may be curbed by ri ses in: commodity prices in the world markets, fees subject to 
local governments’ decisions and administered prices. 
In the Council’s assessment the probabilities of inflation running below or above the inflation target 
in the medium term to be balanced. In the Co uncil’s view, the improvement in global economic 
activity and the previous ly implemented monetary policy easi ng support the return of the economy 
to the potential growth path. The impact of th e hitherto pursued expansionary macroeconomic 
policies abroad and their prospective reversal are an important source of uncertainty for future 
economic growth and inflation in the world econo my and, consequently, also for the domestic 
monetary policy. 
An important factor affecting monetary policy is the situation of the public finance sector. 
Introducing measures aimed at permanently reducing the deficit of the gene ral government sector 
and at curbing the increase of the public debt will support macroeconomic stability and allow to 
meet the criteria for euro adoption. 
The Council expresses the opinion that Poland should join the Exchange Rate Mechanism II and the 
euro area at the earliest pos sible date, after meeting the necessary legal, economic and 
organisational conditions. 
The Council adopted the Inflation Report – February 2010.