NBP MPC Press Release - 2014-07-02
Central bank: nbp | Type: decision | Date: 2014-07-02

Warsaw, 2 July 2014 
 
 
Information from the meeting of the Monetary Policy 
Council held on 1-2 July 2014 
 
The Council decided to keep NBP interest rates unchanged: 
 reference rate at 2.50% on an annual basis; 
 lombard rate at 4.00% on an annual basis; 
 deposit rate at 1.00% on an annual basis; 
 bill rediscount rate at 2.75% on an annual basis. 
 
Growth in global economic activity remains moderate, although the economic 
situation varies across countries. In the United States, following a contraction in GDP in 
early 2014, indicators of economic activity have improved over recent months. In the 
euro area, weak recovery continues . Activity growth in major emerging economies 
remains slow as for these countries. Moderate growth in global economic activity is 
conducive to maintaining low inflation in many economies, including the euro area and 
Central and Eastern European countries. 
Monetary policy of the major central banks remains expansionary . In June , the 
European Central Bank decreased interest rates and announced additional liquidity 
providing operations to banks in order to stimulate lending. 
In Poland, a gradual economic recovery continues. Nonetheless, May data show that 
annual growth in industrial output, construction and assembly output as well as in retail 
sales was slower than in the preceding months. At the same time, a recent decline in 
some business climate indices points to a possible slowdown in economic recovery. 
The economic recovery is accompanied by a moderate acceleration in lending growth, 
both to companies and households. 
Labour market conditions are improv ing gradually . Corporate sector data for May 
indicate a stabilization of employment and a slight acceleration in wage growth. This 
was accompanied by a decline in unemployment rate, which however remains at an 
elevated level. 
In May, CPI inflation was lower than expecte d and stood at 0.2%, remaining 
markedly below the NBP inflation target of 2.5%. At the same time , all core inflation 
measures remained very low. This was accompanied by a further fall in producer prices 
and a decline in inflation expectations of both companies and households. 
The Council got acquainted with the inflation and GDP projection prepared by the 
Economic Institute, which is one of the inputs to the Council's decisions on the NBP 
interest rates. In line with the July projection based on the NECMOD model – prepared 
 
 
under the assumption of unchanged NBP interest rates and taking into account data 
available until 13 June 2014 ( projection cut-off date) – there is a 50-percent probability of 
inflation running in the range of -0.1-0.4% in 2014 (as compared to 0.8-1.4% in the March 
projection), 0.5 -2.1% in 2015 (as against 1.0 -2.6%) and 1.3 -3.1% in 2016 (as against 1.6 -
3.3%). At the same time, the annual GDP growth – in line with the July projection – will 
be, with a 50 -percent probability , in the range of 3.2-4.1% in 2014 (as compared to 
2.9-4.2% in the March projection), 2.6 -4.5% in 2015 (as against 2.7 -4.8%) and 2.3 -4.5% in 
2016 (as against 2.3-4.8%). 
In the opinion of the Council, in the coming months inflation will remain very low 
and may temporarily fall below zero. In the following quarters, the ongoing economic 
recovery and improvement in the labo ur market should support a gradual increase in 
inflation and its approaching the target in the projection horizon . This assessment is 
supported by the July projection of inflation and GDP. Nonetheless, uncertainty persists 
over the scale of further acceleration of economic growth and the prospects of inflation 
returning to the target. 
The Council decided to keep NBP interest rates unchanged. The Council decisions in 
the coming months will depend on the incoming information , which impact s the 
assessment of the outlook for economic growth and inflation in the medium term.