NBP MPC Press Release - 2013-07-03
Central bank: nbp | Type: decision | Date: 2013-07-03

N a t i o n a l B a n k o f P o l a n d 
M o n e t a r y P o l i c y C o u n c i l 
 
 
 
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w w w . n b p . p l / r p p 
 
Warsaw, 3 July 2013 
 
INFORMATION FROM THE MEETING OF THE MONETARY 
POLICY COUNCIL 
held on 2-3 July 2013 
The Council has decided to decrease the NBP interest rates by 0.25 percentage points: 
 reference rate to 2.50% on an annual basis; 
 lombard rate to 4.00% on an annual basis; 
 deposit rate to 1.00% on an annual basis; 
 rediscount rate to 2.75% on an annual basis. 
 
Available data indicate that global economic activity i n the first half of 2013 remained low. 
However, economic growth continued to differ signifi cantly across economies. A markedly 
better situation in the United States is accompanied by probably on-going recession in the 
euro area and the lack of visible rebound in some major developing countries, including 
China. Low global economic activity as we ll as the previously observed fall in commodity 
prices are conducive to low inflation in many countries. 
Signals of a possible tapering of monetary expansion by the Federal Reserve have recently 
led to a deterioration of sentiment in financial markets. This, in turn, resulted in some outflow 
of capital from emerging markets and depreciation of their currencies, including the zloty. 
In Poland, data on industrial output, construction and assembly output as well as retail sales in 
April and May indicate th at growth in economic activity in Q2 remained weak. This 
development is also suggested by a number of economic climate indicators, though some of 
them have improved lately. 
The continuing low economic activity supports weak wage growth. At the same time, May 
2013 saw a halt in the decline of employment in the corporate sector and a slight decrease in 
the registered unemployment rate (in seasonally adjusted terms). 
Growth in lending to the private sector remained limited. Growth in loans to both households 
and enterprises continued to be low. 
CPI inflation declined again in May 2013, reaching 0.5% y/y, i.e. a level markedly below the 
NBP inflation target of 2.5%. The decline in inflation was mainly driven by further 
deceleration in the growth of energy pr ices, including fuel prices. Low level of core inflation 
as well as a stronger decline in producer prices, confirm persistently low demand and cost 
pressures in the economy. This is accompanied by a further decline in inflation expectations 
of households and enterprises. 
2 
 
The Council got acquainted with the inflation and GDP projection prepared by the Economic 
Institute, being one of the inputs to the Council's decisions on the NBP interest rates. 
In line with the July projection based on the NECMOD model – prepared under the 
assumption of unchanged NBP interest rates and taking into account data available until 13 
June 2013 (i.e. not encompassing the July decision of the Council ) – there is a 50-per cent 
probability of inflation running in the range of 0.6-1.1% in 2013 (as compared to 1.3-1.9% in 
the March projection), within 0.4-2.0% in 2014 (as against 0.8-2.4%) and within 0.7-2.4% in 
2015 (as against 0.7-2.4%). At the same time , the annual GDP growth – in line with the July 
projection – will be, with a 50-per cent probability, contained within 0.5-1.7% in 2013 ( as 
compared to 0.6-2.0% in the March projection ), within 1.2-3.5% in 2014 ( as against 1.4-
3.7%) and within 1.6-4.2% in 2015 (as against 1.9-4.4%). 
In the opinion of the Council , the incoming data confirm continued low economic growth in 
Poland accompanied by lack of wage and inflation pressures. The July projection, however, 
indicates that from the second half of 2013 – together with the expected improvement of 
global economic activity – a gradual acceleration of GDP growth can be expected, which will 
be conducive to rising inflation in the coming years. However, despite this, a risk of inflation 
running below the target in the medium term persists. Taking this into consideration, the 
Council decided to lower the NBP interest rates again. 
The Council assesses that the significant reduction of NBP interest rates implemented since 
November 2012 supports economic recovery and limits the risk of inflation running below the 
NBP target in the medium term. The decision to lower NBP interest rates m ade at the current 
meeting ends the loosening cycle of monetary policy. 
The Council adopted the Inflation Report – July 2013.