On Wednesday, July 3rd, the Monetary Policy Council (RPP) concluded its two-day meeting with a decision to keep the National Bank of Poland’s (NBP) interest rates unchanged. This announcement was made by the central bank through an official statement.
“The Council has decided to maintain the NBP interest rates at their current levels,” stated the NBP communication.
The key interest rates remain as follows: the reference rate at 5.75% per annum, the lombard rate at 6.25%, the deposit rate at 5.25%, the rediscount rate at 5.8%, and the bill discount rate at 5.85%.
The last adjustment to the interest rates occurred in October 2023 when they were reduced by 0.25 percentage points.
NBP’s Forecast: Rising Inflation, Slowing GDP Growth
According to the NBP’s July projection, inflation in 2024 is expected to range between 3.1% and 4.3%, with GDP growth projected to be between 2.3% and 3.7%. These figures indicate an upward revision in inflation estimates compared to the March forecast, while GDP growth expectations have been downgraded.
The RPP’s decision was influenced by the latest inflation and GDP projections. The July inflation forecast, which assumes unchanged NBP interest rates and considers data available up to June 14, 2024, predicts annual price dynamics with a 50% probability to be in the range of 3.1% to 4.3% in 2024, 3.9% to 6.6% in 2025, and 1.3% to 4.1% in 2026.
GDP Projections
The July projection also includes estimates for GDP growth. The annual GDP growth rate is projected to be between 2.3% and 3.7% in 2024, down from the 2.7% to 4.3% range predicted in March. For 2025, GDP growth is forecasted to be between 2.8% and 4.8%, and between 1.9% and 4.3% in 2026.
These projections highlight a challenging economic environment for Poland, with rising inflation pressures and slowing GDP growth. The RPP’s decision to maintain current interest rates suggests a cautious approach in balancing inflation control with supporting economic growth.