NBP MPC Press Release - 2011-04-05
Central bank: nbp | Type: decision | Date: 2011-04-05

National Bank of Poland 
 
Monetary Policy Council 
 
ul. Świ ętokrzyska 11/21, 00-919 Warszawa, Poland, phone (48 22) 826 99 55, fax (48 22) 826 37 51, 
 
 
 
 
Warsaw, 5 April 2011 
 
INFORMATION FROM THE MEETING OF THE MONETARY POLICY COUNCIL 
held on 4-5 April 2011 
The Council decided to increase the NBP interest rates by 0.25 percentage points: 
 reference rate to 4.00% on an annual basis; 
 lombard rate to 5.50% on an annual basis; 
 deposit rate to 2.50% on an annual basis; 
 rediscount rate to 4.25% on an annual basis. 
 
Incoming data confirm strengthening recovery of the global economy at the beginning of 2011. 
Economic activity has continued to rise in th e United States. Economic conditions have been 
improving in the euro area, in pa rticular, there has been a fast increase in economic activity in 
Germany, Poland’s main trading partner. However, economic growth in the majority of developed 
countries is still being curbed by high unemployment and ongoing adjustments in the balance sheets 
of households, enterprises and financial institutions. In response to increasing inflationary pressures, 
major emerging economies and some small open developed economies have been tightening 
monetary policy. 
The effects of high fiscal imbala nces in several developed economie s as well as strong monetary 
expansion by major central banks continue to a dd uncertainty about the global economic outlook. 
This uncertainty has been heightened by the disaster in Japan and the increased tensions in Northern 
Africa and the Middle East, as well as by the rise in commodity prices in global markets. 
Moderately favourable macroeconomic data on major developed economies supported an 
improvement in financial market sentiment, yet, due to the disaster in Japan the volatility of 
financial asset and commodity prices has increased in the global markets. Surge in commodity 
prices has contributed to the rise in inflation across the world. 
Data on the Polish economy signal that in the firs t quarter of 2011 the annual growth rate of GDP 
could be close to that observed in the previous quarter. Strong re tail sales growth in February 
reduces the risk of household consumption growth weakening markedly as a result of the expiration 
of factors increasing it at the end of 2010. Investment activity remains curbed despite rising 
capacity utilisation and very good financial situation of enterprises. Uncertainty related to demand 
prospects remains a factor curbi ng enterprises’ investment activity . The rise in employment in 
enterprises is still accompanied by a moderate wa ge growth. At the same time, unemployment has 
remained at a heightened level. 
 
 
 
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Lending to enterprises remains limited mainly due to reasons related to de mand for credit. On the 
other hand, a relatively rapid growth in mortgage lending to households has continued (adjusted for 
the impact of foreign exchange rate fluctuations) whereas consumer loans declined. 
 
In February 2011 CPI inflation remained at the level of 3.6% (with a downward revision of January 
data), i.e. above the NBP inflation target of 2.5%. At the same time, core inflation increased further, 
while inflation expectations rose markedly. The hei ghtened level of inflation is connected primarily 
with increases in the prices of agricultural comm odities and crude oil in the global markets, which 
have not been offset by changes in the zloty exch ange rate, and additionally with a rise in most 
VAT rates at the beginning of 2011. 
Recent data show that the risk of a slowdown of economic activity in Poland has decreased. In the 
assessment of the Council, continuing economic recovery in Poland and further employment growth 
may gradually increase wage and inflationary pre ssures in the medium term. At the same time, a 
rise in inflation expectations combined with a surge in commodity prices across the world create the 
risk that heightened inflation will persist. To re duce the risk of inflation running above the inflation 
target in the medium term the Council decided to raise the NBP interest rates, continuing the 
monetary policy tightening cycle. At the same time, the Council will continue to analyse possible 
signals of increased inflationary pressures. 
An important factor affecting the monetary po licy is the situation of public finances. An 
implementation of decisive measures aimed at permanently reducing the deficit of the general 
government sector and at curbing the increase of public debt is necessary for macroeconomic 
stability and will allow the meeting of euro adoption criteria. 
Although the share of foreign currency loans in new mortgage loans to households has decreased, in 
the opinion of the Council, intr oducing measures aimed at prev enting fast growth in foreign 
currency lending to households is important for macroeconomic stability. Such measures can 
contribute to increasing the effectiveness of the monetary policy transmission mechanism. 
Therefore, the Council expects that measures aimed at curbing the supply of new foreign currency 
loans to households will be introduced. 
The Council maintains its view that Poland should jo in the ERM II and the euro area at the earliest 
possible date, after meeting the necessary legal, economic and organisational conditions.