NBP MPC Press Release - 2023-07-01
Central bank: nbp | Type: decision | Date: 2023-07-01

Warsaw, 6 July 2023
Information from the meeting of the Monetary Policy Council
held on 5-6 July 2023
The Council decided to keep the NBP interest rates unchanged:
▪ reference rate at 6.75%;
▪ lombard rate at 7.25%;
▪ deposit rate at 6.25%;
▪ rediscount rate at 6.80%;
▪ discount rate at 6.85%.
The global economic conditions remain weakened. At the same time, uncertainty about
global economic activity outlook persists. In the euro area, following the contraction of the
economic activity in the previous quarters, GDP growth in 2023 Q2 probably stayed low.
This is accompanied by globally declining inflation, however, in most economies annual
price growth remains elevated. The fall in commodity prices together with the easing of
global supply chain disruptions reduce price pressures, which is reflected in the significant
decrease of growth in producer prices. At the same time, core inflation in most economies
is still elevated, although it gradually declines.
Amid the weakening of economic growth around the world, activity growth also slowed
down in Poland. Retail sales , industrial output as well as construction and assembly
output decreased in annual terms in May 2023. Despite the slowdown in activity growth,
the labour market situation remains good and unemployment is low. The number of
working persons continues to be high, although this is accompanied by the low annual
growth in employment in the enterprise sector.
According to Statistics Poland flash estimate, annual CPI inflation declined again, falling
to a level of 11.5% y/y in June 2023 (compared to 13.0% y/y in May 2023). At the same time,
for the second consecutive month, the overall price level did not change. The decrease in
inflation in annual terms was driven mainly by a fall in annual price growth of energy,
and – although to a lesser extent – of food and non-alcoholic beverages and of some other
categories of goods. Taking into account the available data by Statistics Poland, it can be
estimated that core inflation decreased again in June, as well . At the same time, the
producer price growth is still decreasing strongly, which signals a further easing of
external supply shocks. Together with the lower economic activity growth, it will support
a further decline in consumer price inflation in the coming quarters.
The Council became acquainted with the results of the July projection of inflation and GDP
based on the NECMOD model. In line with the projection, prepared under the assumption
of unchanged NBP interest rates and taking into account data available until 22 June 2023,
there is a 50-percent probability that the annual price growth will be in the range of 11.1 –
12.7% in 2023 (against 1 0.2 – 13.5% in the March 2023 projection), 3. 7 – 6.8% in 2024
(compared to 3.9 – 7.5%) and 2.1 – 5.1% in 2025 (compared to 2.0 – 5.0%). At the same time,
the annual GDP growth – according to this projection – will be with a 50-percent
probability in the range of -0.2 – 1.3% in 2023 (against -0.1 – 1.8% in the March 2023
projection), 1.4 – 3.3% in 2024 (compared to 1.1 – 3.1%) and 2.1 – 4.4% in 2025 (compared
to 2.0 – 4.3%).
The Council assesse s that the weakening of the external economic conditions, together
with a decline in commodity prices, will continue to curb global inflation, which will still
contribute to lower price growth in Poland. The decline in domestic inflation will be
supported by a weakening of GDP growth, including consumption, amid a significant
decrease in credit growth. The Council assesses that the strong monetary policy tightening
undertaken by NBP is leading to a decline in inflation in Poland towards the NBP inflation
target. At the same time, given the strength and persistence of the earlier shocks, which
remain beyond the impact of domestic monetary policy, the return of inflation to the NBP
inflation target will be gradual. The decrease in inflation would be faster if supported by
an appreciation of the zloty exchange rate, which, in the Council’s assessment, would be
consistent with the fundamentals of the Polish economy.
Further decisions of the Council will depend on incoming information regarding
prospects for inflation and economic activity.
NBP will continue to take all necessary actions in order to ensure macroeconomic and
financial stability, including above all to bring inflation down to the NBP inflation target
in the medium term. NBP may intervene in the foreign exchange market, in particular to
limit fluctuations of the zloty exchange rate that are inconsistent with the direction of
monetary policy.