NBP MPC Press Release - 2014-11-05
Central bank: nbp | Type: decision | Date: 2014-11-05

Warsaw, 5 November 2014 
 
Information from the meeting of the Monetary Policy 
Council held on 4-5 November 2014 
 
The Council decided to keep NBP interest rates unchanged: 
 reference rate at 2.00% on an annual basis; 
 lombard rate at 3.00% on an annual basis; 
 deposit rate at 1.00% on an annual basis; 
 rediscount rate at 2.25% on an annual basis. 
 
Growth in global economic activity remains moderate, although the economic 
situation varies across countries. In the United States , economic growth in 2013 Q3 
remained relatively robust. In the euro area, e conomic activity is still low and the 
projections for economic growth in the euro area have been revised downwards. At the 
same time, the economic growth in the euro area next year is expected to be higher than 
this year. This is accompanied by a slowdown in GDP growth in China and growth in 
economic activity in Russia coming to a halt. 
Commodity p rices, including for crude oil, have been recently falling. Along with 
moderate global economic growth, this contributes to low inflation in many countries. In 
Poland’s immediate environment – including the euro area and Central and Eastern 
Europe – inflation remains close to zero. 
Major central banks continue their expansionary monetary policy. However, as the 
economic situation varies across major economies, monetary policies in these economies 
are also diverging. While the Federal Reserve has concluded its asset purchase s, the 
European Central Bank has started purchasing assets and the Bank of Japan increased 
asset purchase programme significantly. 
In Poland, data on economic activity point to deceleration in economic growth in 2014 
Q3. Growth in industrial production, construction and retail sales was lower in 2014 Q3 
than in the previous quarter. This was accompanied by a deceleration of exports growth 
driven by economic slowdown in Poland’s major trading partners. 
Despite lower economic activity growth, employment in the corporate sector 
continues to rise , which is conducive to a gradual decline in unemployment. Yet, the 
unemployment rate remains elevated, which continues to contain wage pressure. As a 
result, wages increase in a pace close to real GDP growth. At the same time, expansion in 
lending to households has been stable, while the growth in lending to the corporate 
sector has been increasing gradually. 
In September, CPI inflation remained negative at -0.3% y/y. The decline in prices , in 
annual terms, was mostly due to falling fuel prices, which resulted from a fall in oil 
 
 
prices in the global markets. Core inflation remained close to zero, which confirms the 
absence of demand pressure in the economy . The continued decline in producer prices 
points, in turn, to a lack of cost pressure. This is accompanied by very low inflation 
expectations of enterprises and households. 
The Council got acquainted with the inflation and GDP projection prepared by the 
Economic Institute. In line with the November projection based on the NECMOD model 
– prepared under the assumption of unchanged NBP interest rates and taking into 
account data available until 2 0 October 201 4 – there is a 50 -per cent probability of 
inflation running in the range of 0.0-0.2% in 2014 (as compared to -0.1-0.4% in the July 
2014 projection), 0.4-1.7% in 2015 (as against 0.5-2.1%) and 0.6-2.3% in 2016 (as against 
1.3-3.1%). At the same time, the annual GDP growth – in line with the November 
projection – will be, with a 50 -per cent probability, 2.9-3.5% in 2014 (as compared to 3.2-
4.1% in the July 2014 projection), 2.0-3.7% in 2015 (as against 2.6-4.5%) and 1.9-4.2% in 
2016 (as against 2.3-4.5%). The economic growth and inflation risk distribution points to 
a greater probability of these variables remaining below the central projection 
throughout the whole projection horizon than above the central projection. 
In the opinion of the Council, the Oc tober adjustment of monetary policy and the 
stable, despite some slowdown, economic growth limit the risk of inflation remaining 
below the target in the medium term . Therefore, the Council decided to keep NBP 
interest rates unchanged. However, the Council highlights that uncertainty regarding the 
economic conditions in the environment of the Polish economy persists. Therefore, the 
Council does not rule out further adjustment of monetary policy , should the incoming 
data point to a risk of deterioration in economic growth outlook. 
The Council adopted the Inflation Report – November 2014.