The Monetary Policy Council (MPC) has decided to keep interest rates unchanged, which is a decision in line with the expectations of all bank economists. Thus, the key reference rate is still 2.50% (after the 25bps cut in July of 2013). However, it changed the wording of its regular press release's crucial sentence to: "In the Council’s assessment NBP interest rates should be kept unchanged for a longer period of time, i.e. at least until the end of Q3 of 2014" from: "The Council maintains its assessment that NBP interest rates should be kept unchanged at least until the end of the first half of 2014."
Governor of the National Bank of Poland (NBP) and MPC chairman Marek Belka said that the decision to prolong the "forward guidance" by three months was made unanimously, though MPC also discussed the prospect of prolonging it by six months. He said that the key reasons for the decision were the new CPI/ GDP projection by NBP as well as the situation in Ukraine.
Commenting on the new projection (it is due to be published in full on Monday), Belka said that it points to a "balanced and virtually inflation-free growth." The annual GDP growth - in line with the March projection - will be, with a 50-percent probability in the range of 2.9-4.2% in 2014 (as compared to 2.0-3.9% in the November 2013 projection), 2.7-4.8% in 2015 (as against 2.1-4.5%) and 2.3-4.8% in 2016.
According to the new projection - prepared under the assumption of unchanged NBP interest rates and taking into account data available until 14 February 2014 (projection cut-off date) - there is a 50-percent probability of inflation running in the range of 0.8-1.4% in 2014 (as compared to 1.1-2.2% in the November 2013 projection), 1.0-2.6% in 2015 (as against 1.1-2.6%) and 1.6-3.3% in 2016.
Commenting on Ukraine, Belka said that this neighbour's situation prompted the Council to demonstrate its view that there are no threats for the Polish economy, at least in respect of monetary policy and its belief in the strong fundamentals of the Polish economy and the stable zloty. He also noted that even if the worst-case scenario, the situation in Ukraine may lower Poland's GDP by no more than 0.2-0.4pps, which "would not be dramatic" in the face of clearly accelerating growth in Poland.
After these statements, most bank analysts said that the first interest rate hikes in Poland may materialise no earlier than in Q1 of 2015 (vs. earlier expected Q3-4 of 2014).
Poland passed a bill on January 26 making it illegal to claim Poles or the Polish state were complicit in Nazi crimes during the Second World War, sparking an angry response from Israel, which ... more
Poland’s National Broadcasting Council (KRRiT) has cancelled on January 10 its own decision to fine the US-owned media group TVN PLN1.48mn (€350,000) for covering protests against ... more
Poland’s state-controlled oil and gas company PKN Orlen has launched an offer to take over Czech refiner Unipetrol, the Polish company said on December 13. PKN Orlen said it will go through with ... more