NBP MPC Press Release - 2011-05-11
Central bank: nbp | Type: decision | Date: 2011-05-11

National Bank of Poland 
 
Monetary Policy Council 
 
ul. Świ ętokrzyska 11/21, 00-919 Warszawa, Poland, phone (48 22) 826 99 55, fax (48 22) 826 37 51, 
 
 
 
 
Warsaw, 11 May 2011 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
 
held on 10-11 May 2011 
The Council decided to increase the NBP interest rates by 0.25 percentage points: 
 reference rate to 4.25% on an annual basis; 
 lombard rate to 5.75% on an annual basis; 
 deposit rate to 2.75% on an annual basis; 
 rediscount rate to 4.50% on an annual basis. 
 
Incoming data point to a continuing recovery in the global economy. According to preliminary 
estimates, GDP growth in the United States slowed down in 2011 Q1, which was probably a 
temporary phenomenon. Moderate recovery in the euro area has continued, including relatively fast 
expansion in economic activity in Germany, Pola nd’s main trading partner. Economic growth in 
most developed countries is still being curbed by high unemployment and ongoing adjustments in 
the balance sheets of households, enterprises and financial institutions. In response to increasing 
inflationary pressures, major emerging economies and some developed economies have been 
tightening monetary policy. 
The effects of high fiscal imbala nces in several developed economie s as well as strong monetary 
expansion by major central banks continue to add to uncertainty about the global economic outlook. 
This uncertainty has been heightened by the tens ions in Northern Africa and the Middle East, the 
natural disaster in Japan as well as by the growth of commodity prices in the global markets. 
The recent period has seen further appreciation of currencies of emerging market economies; the 
Polish zloty has also strengthened following its depreciation in 2011 Q1. 
Recently released data on the Po lish economy confirm the assessment that the annual growth of 
GDP in Q1 could be close to the one observed in th e previous quarter. At the same time, the survey 
of the economic climate in the enterprise sector points to an improvement in the enterprises’ 
expectations about demand, orders and producti on in 2011 Q2. Despite ri sing production capacity 
utilization and a very g ood financial situation of enterprises, firms do not declare a significant 
intensification of investment activ ity in the nearest future. Labour market data show that relatively 
fast growth in employment in enterprises has b een coupled with moderate wage growth. At the 
same time, unemployment has remained at a heightened level (in seasonally adjusted terms). 
Lending to enterprises remains limited mainly due to reasons related to the demand for credit, yet, 
in the recent period growth in the value of loans to this sector has increased. On the other hand, 
relatively fast growth in mortgage lending to households has conti nued (adjusted for the impact of 
foreign exchange rate fluctuations), whereas consumer loans declined. 
 
 
 
- 2 - 
In March 2011 annual CPI inflation increased to 4.3%, continuing to run above the NBP inflation 
target of 2.5%. Faster price gr owth, though stemming mainly from th e further increase in food and 
energy prices, was also observed in most other ca tegories of goods and services. As a result, core 
inflation increased further. PPI growth accelerat ed as well. On the other hand, April 2011 saw a 
slight decline in inflation expectations. 
In the opinion of the Council, in subsequent months CPI inflation will run at a heightened level, 
which is connected primarily with increases in th e prices of agricultural commodities and crude oil 
in the global markets, which so far have not been offset by changes in the zloty exchange rate. 
In the medium term, continuing economic recovery in Poland together with further employment 
growth may gradually increase the wage pressu re, and, in consequence, may cause stronger 
inflationary pressure to persist. The risk of pe rsistently heightened inflation also stems from 
increased inflation expectations combined with fast growth in commodity prices in the world 
markets. In order to curb the risk of inflation running above the inflation target in the medium term, 
the Council decided to increase the NBP’s interest rates, continuing the cy cle of monetary policy 
tightening. At the same time, th e Council will continue to analyze any potential signs of growing 
inflationary pressure. 
An important factor affecting the monetary policy is the situation of public finances. In order to 
maintain macroeconomic stability, and comply with the euro adoption criteria, decisive measures 
need to be implemented, aimed at a lasting reduc tion of the deficit of the general government sector 
and at curbing the increase of public debt. 
Although the share of foreign currency loans in ne w mortgage loans to hous eholds has decreased, 
undertaking measures aimed at preventing fast growth in foreign cu rrency lending to households is, 
in the opinion of the Council, important for macr oeconomic stability. Such measures can contribute 
to increasing the effectiveness of the monetary policy transmission mechanism. Therefore, the 
Council expects that measures aimed at curbing the supply of new foreign currency loans to 
households will be introduced. 
The Council maintains its view that Poland should jo in the ERM II and the euro area at the earliest 
date possible, after meeting the necessary legal, economic and organizational conditions.