NBP MPC Press Release - 2011-09-07
Central bank: nbp | Type: decision | Date: 2011-09-07

National Bank of Poland 
 
Monetary Policy Council 
 
00-919 Warszawa, ul. Świętokrzyska 11/21, tel. (22) 653 28 88, fax (22) 653 13 28 
 
 
Warsaw, 7 September 2011 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
held on 6-7 September 2011 
The Council decided to keep the NBP interest rates unchanged, i.e.: 
 reference rate at 4.50% on an annual basis; 
 lombard rate at 6.00% on an annual basis; 
 deposit rate at 3.00% on an annual basis; 
 rediscount rate at 4.75% on an annual basis. 
 
Since the previous meeting of the Council, furt her signs of weakening global economic activity 
have appeared. In 2011 Q2, annual GDP growth in the United States declined and data on GDP in 
the previous quarters were revise d downwards. In the euro area and in some emerging economies, 
GDP growth also slackened in 2011 Q2. At the same time, consumer and corporate sentiment 
deteriorated in many countries, whereas inflation persisted at an elevated level. 
The heightened risk of a globa l economic slowdown along with the persisting fiscal problems in 
some countries contributed to mounting tensions in the financial markets worldwide. There was a 
significant fall in equity prices accompanied by a further decline in global commodity prices. Given 
the increased risk aversion in the financial markets, the curr encies of emerging economies, 
including the zloty, weakened. Heightened financ ial asset price volatility is also driven by the 
significant surplus of liquidity in the financial markets, relate d to the strongly expansionary 
monetary policy of the major central banks. 
In Poland, data on GDP in 2011 Q2 confirmed relative ly high and stable growth in the first half of 
2011. GDP growth was mainly driven by expandi ng domestic demand, fuelled by both rising 
private consumption and accelerated investment growth. Moreover, enterprises continued to build 
up their inventories at a robust pace. However, data on economic activity in the first months of 2011 
Q3 signal a possibility of a slowdown in economic growth, in particular, of weaker growth in 
industry. 
In 2011 Q2, stable economic growth was accompanie d by a slower increase in the number of the 
employed than the one registered in the previous quarter. Data from the en terprise sector also 
indicate weaker employment growth, following a period of strong performance. Amidst a 
concurrent continued, although slower than hitherto recorded, rise in the number of economically 
active persons, this results in the unemployment rate running at an elevated level. 
2011 Q2 brought a certain accelerati on in wage growth, which might have been driven, to some 
extent, by the disbursement of additional remune ration components in some sectors in connection 
with very good financial results of enterprises. July data indicate no further wage growth 
acceleration in the corporate sector. At the same time the revival in lending to enterprises, including 
 
 
 
- 2 - 
investment loans, continues. The relatively fast growth in mortgage lending to households has also 
been sustained while consumer loans continue to decline. 
In July, annual CPI inflation decreased to 4.1%, but remained markedly above the NBP's inflation 
target of 2.5%. Inflation fell mainly due to a d ecline in food prices, notwithstanding a simultaneous 
rise in energy prices. Core infl ation net of food and energy prices remained unchanged. As current 
inflation fell, households' inflation expectati ons eased accordingly, however PPI inflation 
accelerated somewhat. 
In the coming months, annual CPI inflation will still run at an elevated level, primarily due to the 
previously observed sharp rise in global commodity prices. 
In the medium term, inflation will be curbed by slower domestic GDP growth, amidst a fiscal 
tightening, including reduced public investment sp ending, coupled with interest rate increases 
implemented in the first half of 2011 and a likely global economic slowdown. On the other hand, 
the potential impact of the situat ion in global financial markets upon the zloty exchange rate is an 
upside risk factor to domestic price developments. 
In the opinion of the Council, the significant m onetary policy tightening implemented since the 
beginning of 2011 should facilitate inflation’s return to the target in the medium term. Given the 
above the Council decided to keep the NBP interest rates at the cu rrent level. The Council does not 
rule out the possibility of fu rther monetary policy adjustment , should the outlook for inflation 
returning to the target deteriorate. 
At its meeting held on 23 August 2011, the Council adopted the Monetary Policy Guidelines for 
2012. As in previous years, in the Guidelines presented are the key elements of the monetary policy 
strategy pursued by the National Bank of Poland. The Guidelines also contain an overview of 
macroeconomic developments which may influence monetary policy in 2012, as well as a 
description of monetary policy instruments. 
In the Guidelines, the Council maintained the key elemen ts of its monetary policy strategy, 
including a permanent inflation target of 2.5%, with a symmetric fluctuation band of ±1 pp., 
implemented under a floating exchange rate regi me which does not rule out foreign exchange 
interventions. 
At the meeting held on 23 August 2011 the Council also adopted the Balance of Payments of the 
Republic of Poland in Q1 2011 , whereas at the meeting held on 6-7 September 2011 the Council 
adopted the Forecast of the Balance of Payments of the Republic of Poland in 2012.