Poland’s Monetary Policy Council (MPC) left rates on hold at a record low 1.5% at its latest meeting, the rate setters announced on September 7.

The policymakers reiterated their recent stance that they will not lower the benchmark unless growth is under threat, and staunchly dismissed concerns over the sustainability of the economy. In fact, at the press conference, it was even suggested that the next move in rates is likely to be a hike, albeit not in the near term.
 
As has been the case in recent months, rate setters maintained their stance that there is little pressure for a return to easing. That was despite raised concerns since second quarter GDP growth was reported at a tepid 3.1% y/y. The disappointment sparked hints from analysts that the National Bank of Poland could turn more dovish as a result. 

However, the MPC was clearly keen to state that it is little moved by the results or the speculation. The council reiterated the stance it has maintain for several months - that persistent deflation is externally driven and the economy is performing well. Deflation should slow down in the environment of economic growth and rising wages, the council suggested.

Recent worries on faltering investment were dismissed as well. The MPC considers the downturn temporary, and expects it to end once European Union funding under the new budgetary window kicks in. In other words, in the opinion of the MPC, that risk is also external.

If anything, NBP Governor Adam Glapinski said, the council’s next move may be a hike in the interest rates rather than a cut. Still, “the scenario for an increase in interest rates is rather distant," BZ WBK notes. "We maintain our forecast that rates will remain unchanged in 2016 and throughout 2017.”

The concluding line of the MPC’s statement has become an almost permanent feature. “The council maintains its assessment that ... the current level of interest rates is conducive to keeping the Polish economy on the sustainable growth path," it repeated.