NBP MPC Press Release - 2020-04-08
Central bank: nbp | Type: decision | Date: 2020-04-08

Warsaw, 8 April 2020 
Information from the meeting of the Monetary Policy Council 
held on 8 April 2020 
 
The Council decided to cut the NBP reference rate by 0.50 percentage points, 
i.e. to 0.50%. At the same time, the Council set the remaining NBP interest rates at the 
following levels: 
▪ lombard rate at 1.00%; 
▪ deposit rate at 0.00%; 
▪ rediscount rate at 0.55%; 
▪ discount rate at 0.60%. 
 
NBP will continue – apart from basic operations – to provide liquidity to the banking 
sector using repo transactions. At the same time , NBP will purchase government 
securities and government-guaranteed debt securities on the secondary market as part 
of the structural operations. The timing and scale of the operations will depend on the 
market conditions. Furthermore, NBP will offer bill discount credit aimed at 
refinancing loans granted to enterprises by banks. 
 
The incoming information suggest that COVID-19 pandemic and measures introduced 
to counteract its further spread contribute to the fast deepening fall in activity in many 
economies as well as to a very strong deterioration of sentiment. At the same time, global 
economic growth forecasts, including those for Poland’s main trading partners, have been 
substantially revised downwards. In order to mitigate the negative economic effects of the 
pandemic and ensure conditions for fast economic recovery after current disruption s 
abate, many countries introduce wide-ranging fiscal stimulus packages. Chinese economy 
shows first signs of economic recovery after a strong fall in activity at the begging of the 
year. 
Many central banks have substantially eased monetary conditions by lowering interest 
rates, providing liquidity to the banking sector and pursuing asset purchases. 
Recent forecasts indicate that after the abatement of the current disruptions the global 
economic conditions should improve, supported by fiscal measures and monetary easing. 
At the same time , the pace and scale of the improvement will depend on the impact of 
disruptions on economic agents’ income and sentiment in the longer run. 
In the financial markets – due to the globally deteriorating economic outlook – risk 
aversion remains high leading to increased price volatility of many assets and tightened 
financial conditions. At the same time, global oil prices have fallen significantly since the 
begging of the year, accompanied by decreasing prices of some food commodities. 
 
 
In Poland, economic conditions in the first months of the year were relatively 
favourable. However, measures aimed at limiting the spread of epidemic contribute to the 
reduction of economic activity. In the short run, the scale of activity drop could be very 
sizable. This will be accompanied by a deteriorating situation in the labour market and a 
fall of disposable income o f households. Further ahead , economic activity should, 
however, gradually recover, supported by fiscal measures introduced in Poland and many 
other countries as well as strong macroeconomic fundamentals of the Polish economy 
related to its low internal and external indebtedness and high competitiveness together 
with geographical and sectoral diversification of Polish exports. 
Expected global economic downturn together with lower commodity prices and 
weaker domestic demand will contribute to a marked deceleration of price growth . 
Consequently, despite recent monetary policy easing introduced by NBP , the risk of 
inflation falling below the NBP inflation target in the monetary policy transmission 
horizon prevails. 
Considering the above -mentioned circumstances, the Council decided to ease 
monetary conditions. Thus, the Council cut the NBP interest rates further. 
NBP will continue – apart from basic operations – to provide liquidity to the banking 
sector using repo transactions. NBP will purchase government securities and government-
guaranteed debt securities on the secondary market as part of the s tructural operations. 
These operations are aimed at changing the long-term liquidity structure in the banking 
sector, ensuring the liquidity in secondary markets for the purchased securities and 
enhancing the impact of the NBP interest rate cuts on the economy, i.e. strengthening the 
monetary policy transmission mechanism. The timing and scale of the operations will 
depend on the market conditions. 
Furthermore NBP will offer bill discount credit aimed at refinancing loans granted to 
enterprises by banks. 
The measures undertaken by NBP are aimed at easing financing conditions in the 
economy and mitigating the negative economic impact of pandemic, thus being conducive 
to maintaining macroeconomic and financial stability. Those measures will also contribute 
to recovery in domestic economic activity after the abatement of current disturbances. 
Consequently, they will reduce the risk of inflation falling below the NBP inflation target 
in the medium term.