NBP MPC Press Release - 2016-11-09
Central bank: nbp | Type: decision | Date: 2016-11-09

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Warsaw, 9 November 2016 
Information from the meeting of the Monetary Policy 
Council held on 8-9 November 2016 
 
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 growth remains moderate with uncertainty about its outlook. In the 
euro area, despite negative impact of weak economic conditions in the non -European 
emerging market s on exports , economic growth is stable, as indicated by national 
accounts data for 2016 Q3. In the United States , GDP growth picked up in 2016 Q3 
following several quarters of deceleration. In China, economic growth has stabilised at a 
lower level than in previous years. In Russia, recession is gradually receding. 
Amid moderate global economic growth and lower commodity prices than in 
previous years, price growth in the environment of the Polish economy is still very low. 
However, annual price growth in commodity prices has been positive, leading to slightly 
higher inflation in some economies. 
The European Central Bank has kept interest rates close to zero, including the deposit 
rate below zero, and has continued financial asset purchases. The Federal Reserve – after 
a hike in December 2015 – has kept the interest rates unchanged, pointing to their 
probable increase in the future. 
In Poland, stable economic growth has continued, although current data indicate that 
in 2016 Q3 it may have fallen slightly. The main driver of growth i s rising consumer 
demand, which is supported by the gradual improvement in the labour market, 
favourable household sentiment and the child benefit payments under the ”Family 500 
plus” prog ramme. Data on construction and assembly output indicate that declining 
investment is still containing economic activity. The decrease in investment is related to 
temporarily lower absorption of EU funds after expiration of the previous EU financial 
framework, as well as continued uncertainty about the regulatory environment of 
business. 
Annual growth in prices of consumer goods and services has remained negative, yet 
deflation is gradually subsiding. Descending deflationary trends are also reflected by a 
growth in producer price s. The increase in price growth results from the dissipating 
effects of the earlier sharp fall in global commodity prices, and also the higher wage 
growth in Poland compared to previous quarters. Price growth is contained by low 
 
 
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inflation abroad a nd negative output gap in the domestic economy. At the same time, 
inflation expectations remain low. 
The Council became acquainted with the projection of inflation and GDP prepared 
by the Economic Institute. In line with the November proje ction based on the NECMOD 
model – prepared under the assumption of unchanged NBP interest rates and taking into 
account data available until 21 October 2016 – there is a 50 -percent probability that the 
annual price growth will be in the range of -0.7 ÷ -0.6% in 2016 (against -0.9 ÷ -0.3% in the 
July 2016 projection), 0.5 ÷ 2.0% in 2017 (compared to 0.3 ÷ 2.2%) and 0.3 ÷ 2.6% in 2018 
(compared to 0.3 ÷ 2.6%). The annual GDP growth – according to this projection – will be 
with a 50-percent probability in the range of 2.5 ÷ 3.4% in 2016 (against 2.6 ÷ 3.8% in the 
July 2016 projection), 2.6 ÷ 4.5% in 2017 (compared to 2.4 ÷ 4.5%) and 2.2 ÷ 4.4% in 2018 
(compared to 2.1 ÷ 4.3%). 
In the Council's opinion, price growth will continue to gradually increase and in the 
coming quarters it will turn positive. Besides waned effects of the earlier falls in 
commodity prices, price growth in 2017 will be driven by an expected acceleration in 
GDP growth amid a further rise in wage growth and higher child benefits. In the coming 
quarters, the investment growth rate should also rise, supported by the good financial 
standing of enterprises and their high capacity utilisation, as well as the gradual increase 
in the absorption of EU funds. Such an assessment is supported by NBP November 
projection. The source of uncertainty for expected price developments is the risk of a fall 
in commodity prices. 
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 – November 2016 and Opinion on the 2017 Draft 
Budget Act.