NBP MPC Press Release - 2018-11-07
Central bank: nbp | Type: decision | Date: 2018-11-07

Warsaw, 7 November 2018 
Information from the meeting of the Monetary Policy Council 
held on 6-7 November 2018 
 
The Council decided to keep the NBP interest rates unchanged: 
• reference rate at 1.50%; 
• lombard rate at 2.50%; 
• deposit rate at 0.50%; 
• rediscount rate at 1.75%. 
 
Global economic conditions remain favourable, although signs of a weakening have 
appeared in some economies. In the euro area, GDP growth declined in 2018 Q3, and some 
indicators of economic conditions deteriorated. At the same time, in the United States 
growth has picked up slightly, which confirms that economic conditions in this country 
are still very strong. In turn, in China activity growth is gradually slowing down. 
A rise in uncertainty about the global economic outlook contributed to some 
weakening of sentiment in the international financial markets. Concurrently, energy 
commodity prices have decreased slightly, following their previous sharp rise. The 
relatively high level of these prices continues to add to inflation in many countries. At the 
same time, core inflation in the external environment of the Polish economy, including the 
euro area, remains moderate. 
The European Central Bank keeps interest rates clos e to zero, including the deposit 
rate below zero. Alongside that, the ECB continues to purchase financial assets, although 
it has reduced the scale of the purchases and has announced their termination by the end 
of the year. The Federal Reserve continues to gradually tighten monetary policy. 
In Poland, incoming data point to economic conditions remaining strong, although in 
2018 Q3 GDP growth was probably lower than in the first half of the year. GDP growth is 
still driven by rising consumption, albeit at a slightly lower rate than in the previous 
quarters, that is fuelled by increasing employment and wages as well as very high 
consumer sentiment. This is accompanied by a rise in investment. 
Notwithstanding relatively high economic growth and wages rising faster than in the 
previous year, consumer price growth remains moderate. At the same time, inflation net 
of food and energy prices continues to be low. 
The Council became acquainted with the results of the November projec tion of 
inflation and GDP, prepared under the assumption of unchanged NBP interest rates. In 
line with the November projection based on the NECMOD model, there is a 50 -percent 
probability that annual price growth will be in the range of 1.7-1.9% in 2018 (against 1.5-
2.1% in the July 2018 projection), 2.6-3.9% in 2019 (compared to 1.9-3.5%) and 1.9-3.9% in 
2020 (compared to 1.7-3.9%). At the same time, annual GDP growth – according to this 
 
 
projection – will be with a 50-percent probability in the range of 4.4-5.2% in 2018 (against 
4.0-5.2% in the July 2018 projection), 2.7-4.4% in 2019 (compared to 2.8-4.7%) and 2.3-4.2% 
in 2020 (compared to 2.4-4.3%). 
In the Council's assessment, current information and the results of the projection point 
to a relatively favourable outlook for economic conditions in Poland, although a gradual 
slowing in GDP growth is expected in the years ahead. In line with the projection, inflation 
in 2019 will probably exceed 2.5%, boosted, among others, by a rise in energy prices 
remaining beyond the impact of monetary policy , but will remain within a band for 
deviations from the target . In the medium term , in turn, the expected slowdown in 
economic growth will have a dampening effect on inflation. In effect , in the monetary 
policy transmission horizon inflation will remain close to the target. 
The Council judges that the current level of interest rates is conducive to keeping the 
Polish economy on a sustainable growth path and maintaining macroeconomic stability. 
The Council adopted the Inflation Report – November 2018.