NBP MPC Press Release - 2011-01-19
Central bank: nbp | Type: decision | Date: 2011-01-19

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, 19 January 2011 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
held on 18-19 January 2011 
The Council decided to increase the NBP interest rates by 0.25 percentage points: 
 reference rate to 3.75% on an annual basis; 
 lombard rate to 5.25% on an annual basis; 
 deposit rate to 2.25% on an annual basis; 
 rediscount rate to 4.00% on an annual basis. 
 
The recovery in the world economy is continuing. Data from the United States and the euro area 
point to stable moderate economic growth. New da ta on Germany, Poland’s main trading partner, 
confirm positive economic developments in that count ry. Yet, economic growth in the majority of 
developed countries is still be ing curbed by high unemployment and ongoing adjustments in the 
balance sheets of households, enterprises and financial institutions. Major emerging economies 
have witnessed the tightening of monetary policy aimed at limiting growing macroeconomic 
imbalances, including rising inflation. The effects of high fiscal imbalance and its planned reduction 
in the developed economies, as we ll as the effects of monetary e xpansion, including non-standard 
measures undertaken by major centr al banks, continue to be an un certainty factor for the global 
economic growth. 
The recent period has witnessed some improvement of sentiment in the international financial 
markets. Yet, uncertainty about the fiscal situatio n in some euro area countries has continued. For a 
few quarters now world prices of commodities, incl uding the prices of crude oil and food, have 
again been rising strongly, which has triggered an acceleration in inflation in most countries. 
Data on the Polish economy, includ ing strong growth in industrial output, construction and retail 
sales in October and November 2010, as well as favourable business se ntiment suggest that 
economic growth in Q4 has continued at the level close to the one in 2010 Q3. Lending to 
enterprises remains limited, mainly due to reasons related to the demand for credit. On the other 
hand, loans to households continue to grow. 
In December 2010 the annual CPI inflation rose to 3.1%, remaining above the NBP’s inflation 
target of 2.5%. The inflation increase was primarily connected with a strong rise in fuel prices 
driven by growing prices of energy commodities in the global markets. According to preliminary 
estimates, also core inflation increased. The in flation rise was accompanied by an increase in 
inflation expectations. 
In the months to come, CPI inflation may be expect ed to continue above the inflation target due to 
previous strong rises of food prices, high growth in fuel prices and the effected increase in the 
majority of VAT rates in 2011. 
 
 
 
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In the Council’s assessment, the acceleration of economic growth in Poland supporting the 
improvement in the labour market may lead to a gradual rise in wa ge and inflationa ry pressure in 
the medium term. At the same time, a strong rise in commodity prices in the global markets – amid 
economic recovery – creates a risk that heightened inflation expectations pers ist. In order to curb 
the risk of inflation remaining above the inflation target in the medium term, the Council decided to 
raise the NBP’s interest rates. At the same time the Council will continue to analyse the signs of a 
possible rise in inflationary pressure. 
An important factor affecting the monetary po licy is the situation of public finances. An 
implementation of 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. 
In the opinion of the Council, introducing measures aimed at preventing fast growth in foreign 
currency lending to households is important for macroeconomic stab ility. Such measures can also 
contribute to increasing the effectiveness of the monetary policy transmission mechanism. 
Therefore, the Council expects that measures aimed at curbing the supply of new foreign currency 
loans to households will be introduced. 
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.