NBP MPC Press Release - 2016-07-06
Central bank: nbp | Type: decision | Date: 2016-07-06

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Warsaw, 6 July 2016 
Information from the meeting of the Monetary Policy 
Council held on 5-6 July 2016 
 
The Council decided to keep the NBP interest rates unchanged: 
 reference rate 1.50%; 
 lombard rate 2.50%; 
 deposit rate 0.50%; 
 rediscount rate 1.75%. 
 
Global economic growth remains moderate. At the same time, uncertainty remains 
about future economic conditions in the global economy, associated additionally with 
the implications of the referendum on the United Kingdom ’s membership in the 
European Union. The result of the referendum has increased risk aversion in the global 
financial markets, which was reflected in a depreciation of currenc ies and a decline in 
asset prices in many countries. 
A modest recovery continues in the euro area , despite the negative impact of weak 
economic conditions in developing countries. The expected slowdown in growth in the 
United Kingdom is a risk factor for economic conditions in the euro area. In the United 
States e conomic growth remains moderate . However, weaker data from the labour 
market impedes clear assessment of future economic conditions in the US. In China the 
economic growth has probably decelerated further, while Russia and Brazil remain in a 
recession. 
Despite some increase in recent months , prices of oil and many other commodities in 
the global markets remain markedly lower than in the previous years. This development 
– combined with moderate global economic activity – is the main driver behind very low 
consumer price growth in a number of economies. 
The European Central Bank is keeping its interest rates close to zero , including the 
deposit rate below zero, and continues financial asset purchases. In the United States, 
data from financial mar kets suggest s a delay of further interest rate increases. At the 
same time, uncertainty about further decisions of the Federal Reserve has increased. 
In Poland, incoming data show s that economic activity has accelerated after a GDP 
slowdown in 2016 Q1. A r elatively strong increase in the wage bill and favourable 
consumer sentiment as well as a sound financial position of enterprises and their high 
capacity utilisation have a positive influence on domestic economic conditions. This is 
accompanied by a stable growth of credit to the non -financial sector. An increase in 
disposal income of households resulting from the "Family 500+" programme will 
contribute to GDP growth in the coming quarters. Yet, the uncertainty about economic 
 
 
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conditions abroad, including th e effects of the UK referendum, is a risk factor for 
domestic economic activity. 
With negative output gap and a moderate growth of average nominal wages, 
currently there is no inflationary pressure in the economy. Annual consumer price 
growth and producer price growth remain negative. External factors – particularly the 
earlier sharp fall in the global commodity prices and the low price growth in the 
environment of the Polish economy – continue to be the main sources of deflation. This is 
accompanied by low inflation expectations. The persisting def lation has not adversely 
affected decisions taken by economic agents so far. 
The Council became acquainted with the projections of inflation and GDP 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 the projection cut -off date of 24 June 2016 – there is a 50 -percent 
probability that the annual price growth will be in the range of -0.9 ÷ -0.3% in 2016 
(compared to -0.9 ÷ 0.2% in the March 2016 projection), 0.3 – 2.2% in 2017 (compared to 
0.2 – 2.3%) and 0.3 – 2.6% in 2018 (compared to 0.4 – 2.8%). In turn , the annual GDP 
growth rate – in line with this projection – will be with a 50 -percent probability i n the 
range of 2.6 – 3.8% in 2016 (compared to 3.0 – 4.5% in the March 2016 projection), 2.4 – 
4.5% in 2017 (compared to 2.6 – 4.8%) and 2.1 – 4.3% in 2018 (compared to 2.1 – 4.4%). 
In the Council’s assessment, the CPI growth will remain negative in the c oming 
quarters due to the earlier substantial decline in the global commodity prices. At the 
same time, GDP growth is expected to remain stable in the coming quarters , following a 
temporary deceleration at the beginning of the year. Consumer demand will continue to 
be the main driver of economic growth , supported by rising employment, the forecasted 
acceleration of wage growth and an increase in social benefits. This notwithstanding, the 
downside risks to the global economic conditions, aggravated by the un certainty about 
the effects of the UK’s EU referendum, and the volatility of commodity prices, remain 
the sources of uncertainty for the economy and the price developments. 
The Council confirms its assessment that – given the available data and forecasts – the 
current level of interest rates is conducive to keeping the Polish economy on the 
sustainable growth path and maintaining macroeconomic balance. 
The Council adopted Inflation Report – July 2016.