Poland Maintains Steady Base Interest Rate for Ten Straight Months

Interest rates on pawnshops and deposits also remained unchanged at 6.25 percent, respectively. and 5.25 percent.

Monetary policy in Poland is unchanged for the 10th month in a row, after two successive easings in September and October last year.

According to the preliminary data of the National Statistical Service GUS, annual inflation in the country accelerated to 4.3 percent in August. from 4.2 percent in July, reaching the highest level in the last eight months.

The annual inflation target of the Central Bank is 2.5 percent. plus/minus one percentage point.

Meanwhile, the annual growth of the Polish economy accelerated from 2.0 percent. in the first quarter of the year to 3.2 percent. in the second to the strongest since the third quarter of 2022, beating expectations. Gross domestic product growth in April-June compared to the previous three months also topped forecasts at 1.5 percent, boosted by robust household consumption and rising investment.

The head of the central bank, Adamas Glapinskis, stated in July that the reduction of interest rates until 2026 is unlikely, but last month he already hinted that the possibility of an earlier easing of monetary policy is not ruled out.

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2024-09-07 21:35:05

National bank of poland inflation

Poland’s‍ Monetary Policy:⁢ A Delicate Balance⁣ Between Inflation​ and Economic Growth

As Poland’s economy continues ⁤to ‍grow, the country’s central bank, ‌Narodowy Bank​ Polski (NBP), faces the challenging‌ task⁤ of balancing inflation control ⁣with stimulating economic growth. The latest data reveals​ that interest rates on⁢ pawnshops and deposits ⁣remain unchanged at 6.25% and 5.25%, respectively, marking the‍ 10th ​consecutive month ‌of unchanged monetary policy

.

In ⁢August, ‍Poland’s annual inflation rate accelerated‌ to 4.3%, surpassing the ‌previous month’s 4.2% and reaching the​ highest level⁣ in ⁤eight months, according to preliminary data‍ from the National Statistical Service ​GUS

. This upward trend puts pressure on the NBP to maintain a ‍tight‍ grip‍ on ⁣interest rates, ensuring‍ that the annual inflation target of 2.5% ± ⁣1 percentage point‍ is met⁤

.

On the other hand, Poland’s economy‌ has‌ shown ⁢remarkable ⁣resilience, with ⁤annual growth accelerating from 2.0%‍ in the first​ quarter to 3.2%⁤ in ⁢the ‍second quarter, the⁤ strongest growth since the third quarter of 2022

. This ‍trend is largely driven by robust household consumption ⁣and rising investment, leading to a ‌1.5% growth in gross domestic product (GDP) compared to the previous three months, beating expectations

.

The NBP,‌ led by Governor⁣ Adam Glapiński,⁤ has been⁤ cautious in its monetary policy decisions. In July, ⁣Glapiński stated that reducing interest⁢ rates until 2026 is unlikely, ⁤but last month, he hinted that an ⁢earlier easing of monetary ‌policy is not entirely ruled out

. This stance⁤ is reflected in the current benchmark rate, ⁣which has been maintained‍ at 5.75% since​ October [2].

Historically, ‍Poland’s interest rates have fluctuated in response to economic conditions. At the end of⁤ 2022, the NBP Reference Rate stood at⁤ 6.75%, up from 1.75% at the end of ⁢2021 and 2.50% a decade earlier [1]. The⁢ current rate of 5.75% is a result of the‌ two ‌successive easings in September‍ and‌ October‌ last year

.

As⁣ Poland navigates⁣ the complexities of monetary policy, the NBP must carefully weigh the need⁢ to ​control inflation against the imperative to support economic growth. With inflation trending ‌upward and the economy performing strongly, the central ‍bank’s ⁣next move will be closely ‍watched by economists and policymakers ‍alike.

Current ⁢Interest ⁣Rates in ‍Poland

NBP ​Reference Rate: 5.75%‌ [2]

⁢ Interest⁢ rates ‌on ⁤pawnshops: ​6.25%

* Interest rates on deposits: 5.25%

Sources

[1] Focus Economics: ⁣Poland Interest⁢ Rate

[2] Bloomberg: Poland ⁢to⁣ Keep Interest Rates Steady Amid Higher Easing Pressure

[3] Global-Rates: NBP Reference Rate

Nbp monetary Policy Report

Poland’s Monetary Policy: A Delicate Balance Between Inflation and Economic Growth

As Poland’s economy continues to grow, the country’s central bank, Narodowy Bank Polski (NBP), faces the challenging task of balancing inflation control with stimulating economic growth. The NBP’s monetary policy decisions have far-reaching implications for the economy, and getting it right is crucial for sustaining growth and keeping inflation in check.

Current Monetary Policy Stance

The NBP has kept interest rates on pawnshops and deposits unchanged at 6.25% and 5.25%, respectively, for the 10th month in a row. This decision comes after two successive easings in September and October last year. The central bank’s caution is understandable, given the accelerating inflation rate, which reached 4.3% in August, the highest level in eight months.

Inflation Target

The NBP’s annual inflation target is 2.5%, plus/minus one percentage point. This target is in line with the European Central Bank’s (ECB) inflation objective of “below, but close to 2%” [1[1]. The NBP’s inflation target is also similar to that of other central banks, such as the National Bank of Poland (NBP), which aims to keep inflation at 2.5% with a symmetric band [3[3].

Economic Growth

Despite the caution on interest rates, Poland’s economy continues to grow at a robust pace. The annual growth rate accelerated from 2.0% in the first quarter to 3.2% in the second, beating expectations. Gross domestic product (GDP) growth in April-June also topped forecasts at 1.5%, boosted by robust household consumption and rising investment.

Central Bank’s Dilemma

The head of the NBP, Adamas Glapinskis, has hinted that an earlier easing of monetary policy is not ruled out, although he previously stated that interest rate reduction until 2026 is unlikely. The central bank is caught between the need to control inflation and the desire to support economic growth. Easing monetary policy too quickly could spark higher inflation, while keeping interest rates high for too long could slow down economic growth.

Delicate Balance

The NBP’s challenge is to find a delicate balance between inflation control and economic growth. As the Polish economy continues to grow, the central bank must carefully calibrate its monetary policy to ensure that inflation remains within its target range while supporting sustainable economic growth. This requires close monitoring of economic indicators, including inflation, GDP growth, and employment rates.

Conclusion

Poland’s monetary policy is a delicate balancing act between controlling inflation and stimulating economic growth. The NBP’s cautious approach to interest rates reflects the challenging economic environment, and its decisions will have significant implications for the economy. As the Polish economy continues to grow, the central bank must remain vigilant in its pursuit of price stability and sustainable economic growth.

References:

[1] European Central Bank. (n.d.). Monetary policy. Retrieved from

[2] Chopra, A. (n.d.). Monetary Policy and Financial Sector Reform in Poland. Retrieved from

[3] National Bank of Poland. (n.d.). Monetary Policy. Retrieved from

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