After the average growth of prices in March turned out to be higher than expected and the Polish zloty’s strength dropped down to levels unseen in a decade, market observers impatiently awaited a statement following the Monetary Policy Council’s (RPP) meeting.
When over a year ago the pandemic reached Poland, the National Bank of Poland (NBP) withdrew from traditional conferences following its meetings during which NBP and RPP head Adam Glapiński answered journalists’ questions. The RPP’s statement is therefore the only clue concerning important signals for the market which come from the RPP itself.
The maintenance of interest rates on an unchanged level (the reference rate is 0.1 percent) was not a surprise. This decision means that the interest rates for deposits and loans from the NBP will be unchanged and that for now, changes in interests rates for loans and deposits in banks should not be expected.
When could the NBP change interest rates? Other central banks in the region also lowered them, yet they have been recently mentioning the possibility of raising them, especially given the situation where inflation could run too hot.
Nevertheless, in the last period, the RPP has not diverted from its chosen course. Have there been any signals in the latest statement which could point to the raising of interest rates?
“This is absolutely not the moment to search for the voice of hawks within the NBP’s communication,” mBank experts believe.
The average level of prices in Poland in March grew by 3.2 percent, which was more than expected. The RPP pointed out that there were factors behind this increase which were outside the influence of monetary policy, such as increases in the prices of oil, electricity and garbage disposal.
“The RPP took care of the temporary growth of inflation in its statement. In the near future, the CPI (consumer prices) index is meant to return to its target thanks to the NBP’s actions,” mBank’s economists report.
According to the statement, inflation has also been rising due to the increase in costs of functioning of companies during the pandemic, including higher costs of transport and temporary disruptions in supply chains.
The RPP pointed out that in March the pandemic situation in Poland worsened and restrictions were tightened which had a negative influence on economic activity and the mood in some sectors. The RPP believes that in the upcoming quarters there will be a revival of the economic situation although its scale and speed are uncertain.