Poland's NBP keeps interest rates unchanged; economic conditions weak

The reference rate stays at 5.75 per cent, the lombard rate at 6.25 per cent, the deposit rate at 5.25 per cent, the rediscount rate at 5.80 per cent and the discount rate at 5.85 per cent, an NBP release said.

The council feels that the current level of the NBP interest rates is conducive to meeting the NBP inflation target in the medium term.

Incoming data indicate an increase in economic activity growth early this year in Poland.

In January and February this year, the annual growth rates of retail sales and industrial production were markedly positive.

The labour market situation remains good and unemployment is low. Although the number of working persons continues to be high, employment in the enterprise sector in February this year was lower than a year ago. At the same time, the annual wage growth was higher than in the late 2023.

According to a Statistics Poland flash estimate, annual consumer price index (CPI)-based inflation in March this year declined to 1.9 per cent from 2.8 per cent in February. Core inflation was estimated to have significantly decreased again in March.

Despite the observed economic recovery, demand and cost pressures in the Polish economy remain low, which amidst weakened economic conditions and falling inflation pressure abroad supports lower domestic inflation.

As a result, it is expected that in the coming months annual CPI growth will run at the level consistent with the NBP inflation target, the NBP release noted.

Should energy prices be raised, inflation might increase significantly in the second half of 2024, it added.

Fibre2Fashion News Desk (DS)