NBP MPC Press Release - 2011-12-07
Central bank: nbp | Type: decision | Date: 2011-12-07

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, 7 December 2011 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY 
COUNCIL 
held on 6-7 December 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 growth remained weak in the eu ro area. Moreover, the incoming data 
indicate a possible further deterioration in busine ss conditions in the region. Economic activity 
may be dampened by increasingly pessimistic expecta tions of agents, rising funding costs and 
possible constraints on lending by banks. In the Un ited States, in turn, economic growth 
recovered somewhat in 2011 Q3, although business ac tivity indicators - despite their slight 
improvement observed recently - continue to run at historically low levels. Both in the euro 
area and in the United States inflation remains ele vated, triggered by a prior rise in commodity 
prices. In the developing countries, on the other h and, there are signs of easing inflationary 
pressure. 
Due to the global economic slowdown coupled with th e fiscal problems faced by some euro 
area countries, tensions in the financial markets p ersist worldwide. Risk aversion remains 
heightened, which feeds into higher volatility of a sset prices, including exchange rates. 
Increased asset price volatility is also fuelled by huge liquidity surplus in the global financial 
markets, related to strongly expansionary monetary policy pursued by major central banks. 
In Poland, GDP data for 2011 Q3 confirmed continuou sly relatively high and stable growth in 
that period, running at a rate close to that record ed in 2011 Q2. GDP growth was mainly driven 
by expanding domestic demand, supported by, on the one hand, rising private consumption 
and, on the other, somewhat accelerated investment growth. Yet, as compared with the 
previous quarters, contribution of net exports to GDP growth rose considerably. 
October retail sales remained robust, while industr ial output growth slowed down slightly, 
accompanied by a more pronounced deceleration in co nstruction and assembly output. As 
suggested by business indicators, we may expect fla gging economic activity in the subsequent 
quarters, largely as a result of the anticipated sl owdown affecting Poland's major trading 
partners. 
LFS data suggest that in 2011 Q3 growth in the numb er of persons working in the economy 
was increasingly sluggish, while the unemployment r ate remained at a heightened level. In 
October, also corporate employment continued to fall and wage growth remained moderate. 
2 
 
Lending to corporates saw a further rise in October . Similarly, zloty-denominated mortgage 
lending to households continued to grow relatively steeply, while consumer lending in annual 
terms went on shrinking. 
Annual CPI inflation increased to 4.3% in October, remaining markedly above the NBP's 
inflation target of 2.5%. The rise in inflation was mainly driven by growing food and fuel 
prices, albeit core inflation eased as well. At the same time, PPI inflation stayed high, while 
households' inflation expectations remained elevated. 
In the coming months, annual CPI will persist at a heightened level, primarily due to the 
previous sharp rise in global commodity prices and the zloty depreciation of recent months. 
Waning impact of VAT rate increases and considerabl e rises in food and energy prices 
observed in the first half of 2011 will be conduciv e to lowering inflation at the beginning of 
2012. 
In the opinion of the Council, in the medium term i nflation will be curbed by gradually 
decelerating domestic demand amidst fiscal tighteni ng, including reduced public investment 
spending, and interest rate increases implemented i n the first half of 2011, as well as the 
expected global economic slowdown. The impact of th e 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 mone tary policy tightening implemented in the 
first half of 2011 should enable inflation to retur n to the target in the medium term. Given the 
above, the Council decided to keep the NBP interest rates unchanged. The Council does not 
rule out the possibility of further monetary policy adjustments in the future, should the outlook 
for inflation returning to the target deteriorate.