NBP MPC Press Release - 2011-11-09
Central bank: nbp | Type: decision | Date: 2011-11-09

National Bank of Poland 
Monetary Policy Council 
 
 
00-919 Warszawa, ul. Świ ętokrzyska 11/21, tel. (22) 653 28 88, fax (22) 653 13 28 
 
 
Warsaw, 9 November 2011 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
held on 8-9 November 2011 
The Council decided to keep the NBP interest rates unchanged, i.e.: 
 reference rate at 4.50% on an annual basis; 
 lombard rate at 6.00% on an annual basis; 
 deposit rate at 3.00% on an annual basis; 
 rediscount rate at 4.75% on an annual basis. 
 
In 2011 Q3 economic sentiment deteriorated cons iderably in the global economy, including, in 
particular, in the euro area a nd the United States. Nevertheless, the released data, including 
preliminary estimate of GDP in Q3 in the United States, have not so far confirmed a further 
significant weakening in activity in those eco nomies. At the same time, however, economic 
growth forecasts for 2012 were further revise d downwards and inflation remained elevated. 
There persists heightened uncertainty about global economic developments in the coming 
quarters and about the scale of economic slowdow n in countries being Poland’s main trading 
partners. 
The risk of a global economic slowdown comb ined with fiscal problems faced by some 
countries, are behind the enduring tensions in the fina ncial markets worldwide. The decisions 
taken at the Euro Area Summit supported improveme nt of financial markets’ sentiment, yet, 
amidst persistently uncertain situation in Greece, risk aversion remains heightened, which adds 
to increased volatility of asset pr ices, including of foreign exchange rates. Increased asset price 
volatility is also driven by ampl e liquidity in the global financia l markets, related to strongly 
expansionary monetary policy of the major central banks. 
According to incoming information on the Polish economy – including favourable data on 
industrial output, construction and assembly outpu t and retail sales – GDP growth in 2011 Q3 
continued to be relatively high and presumably close to the one recorded in 2011 Q2. At the 
same time, majority of business sentiment indicators suggest that economic activity may 
weaken somewhat in the coming quarters, whic h is largely connected to the anticipated 
economic slowdown in countries being Poland’s major trading partners. Da ta on the enterprise 
sector point to continued moderate growth in wages amidst concurrent further decline in 
employment. Unemployment rate remains elevat ed. Lending to enterprises is growing, a 
relatively high growth continues also in mort gage lending to households, whereas consumer 
loans continue to decline in annual terms. 
In September, annual CPI inflation decreased to 3.9%, remaining markedly above the NBP’s 
inflation target of 2.5%. Decreas e in inflation was related to further decline in food prices, 
despite continued strong rise in energy prices . Core inflation net of food and energy prices 
2 
 
slowed down slightly. Yet, at the same time, c ontinued strong growth was recorded in PPI, and 
inflation expectations of households shifted somewhat upwards. 
In the coming months, annual CPI inflation will con tinue to run at an elevated level, primarily 
due to the previous sharp rise in global commod ity prices and the zloty depreciation of recent 
months. Waning impact of VAT rate increases a nd considerable rises in food and energy prices 
observed in the first half of 2011 will be conduc tive to lowering inflation at the beginning of 
2012. 
The Council got acquainted with the projection of inflation and GDP prepared by the Economic 
Institute of the NBP, being one of the inputs to the Council’s decisi ons on the NBP interest 
rates. In line with the November projection – under the assumption of constant NBP interest 
rates – there is a 50-percent probability of inflation running in the range of 3.9-4.2% in 2011 
(as compared to 3.7-4.4% in the July projectio n), 2.5-3.9% in 2012 (as compared to 2.1-3.4%) 
and 2.2-3.7% in 2013 (as compared to 1.8-3.4%). In turn, with a 50-percent probability the 
November projection sees the annual GDP gr owth in the range of 3.7-4.3% in 2011 (as 
compared to 3.0-4.9% in the July projection), 2.0-4.1% in 2012 (as compared to 1.9-4.5%) and 
1.5-4.0% in 2013 (as compared to 1.5-4.3%). 
In the opinion of the Council, in the medium te rm inflation will be curbed by somewhat lower 
domestic economic growth amidst fiscal ti ghtening, including reduc ed public investment 
spending, and interest rate in creases implemented in the firs t half of 2011, as well as the 
expected global economic slowdown. Such an a ssessment is also supported by the November 
projection of inflation and GDP. Th e impact of the situation in the global financial markets on 
zloty exchange rate continues to be an upside risk to domestic price developments. 
In the opinion of the Council, the significant m onetary policy tightening implemented in the 
first half of 2011 should enable in flation to return to the target in the medium term. Given the 
above, the Council decided to keep the NBP in terest rates unchanged. The Council does not 
rule out the possibility of further monetary policy adjust ments in the future, should the outlook 
for inflation returning to the target deteriorate. 
The Council has adopted the Inflation Report – November 2011.