NBP MPC Press Release - 2014-03-05
Central bank: nbp | Type: decision | Date: 2014-03-05

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Warsaw, 5 March 2014 
 
 
 
Information from the meeting of the Monetary Policy 
Council held on 4-5 March 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, economic conditions remain 
favourable despite signs of some weakening observed in the recent period . At the same 
time, the euro area has been experiencing a slow, yet somewhat limited recovery. 
Activity growth in the largest emerging economies continues to be weak as compared 
with their previous performance. Some of these economies have seen deterioration in 
business indicators in the recent period. Moderate growth in global economic activity is 
conducive to maintaining low inflation in many countries. 
Data on domestic economic activity confirm a continuation of the gradual recovery in 
Poland. In 2013 Q 4 economic growth was higher than in 2013 Q3. GDP growth was 
supported primarily by net exports. At the same time, domestic demand contribution to 
GDP growth increased. This was related to accelerati ng consumption and investment 
growth. 
The gradual recovery at the beginning of 2014 is indicated by a further growth in 
industrial output and retail sales in January 2014. At the same time, growth in 
construction output was negative. Yet, business climate indicators suggest that recovery 
will continue in the coming quarters. 
The gradual economic recovery is contributing to an improvement in labour market 
conditions. According to the LFS, in 2014 Q4 the number of persons working in the 
economy was higher than a year before. This helped to reduce somewhat the 
unemployment rate, which however remained elevated. U nemployment persist ing at 
heightened levels is hampering wage pressure in the economy. 
According to preliminary data, CPI inflation stood at 0.7% in January 2014, thus 
remaining markedly below the NBP inflation target of 2.5%. This was accompanied by a 
decline in core inflation measures, which confirms that demand pressure continues to be 
 
 
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weak. In turn, weak cost pressure in the economy is manifested by a further drop in 
producer prices. This is accompanied by low inflation expectations. 
Lending to the private sector – while accelerating slightly – remains limited. In 
particular, since mid -2013 there has been a gradual acceleration in consumer loans. The 
past few months have seen a slight growth in housing and corporate loans from a low 
level. 
 The Council got acquainted with the projection of inflation and GDP prepared by the 
Economic Institute, being one of the inputs to the Council’s decisions on NBP interest 
rates. In line with the March projection based on the NECMOD model – prepared under 
the assumption of unchanged NBP interest rates and taking into account data available 
until 14 February 2014 (projection cu t-off date) – there is a 50 -percent probability of 
inflation running in the range of 0. 8-1.4% in 201 4 (as compared to 1.1-2.2% in the 
November 2013 projection), 1.0 -2.6% in 201 5 (as against 1.1-2.6%) and 1. 6-3.3% in 201 6. 
At the same time, the annual GDP growth – in line with the March projection – will be, 
with a 50-percent probability in the range of 2.9-4.2% in 2014 (as compared to 2.0-3.9% in 
the November 2013 projection), 2. 7-4.8% in 201 5 (as against 2.1-4.5%) and 2. 3-4.8% in 
2016. 
In the opinion of the Council, gradual economic recovery is likely to continue in the 
coming quarters, however, inflationary pressures will remain subdue d. Such assessment 
is confirmed by the March projection of inflation and GDP. Therefore, the Council 
decided to keep NBP interest rates unchanged. In the Council’s assessment NBP interest 
rates should be kept unchanged for a longer period of time, i.e. at least until the end of 
the third quarter of 2014. 
In the opinion of the Council, lowering interest rates in the first half of 2013 and 
keeping them unchanged in subsequent quarter s, supports recovery of the domestic 
economy, gradual return of inflation to the target and stabilisation in the financial 
markets.