Internal and external factors should bring inflation down says RPP

Rafał Guz/PAP

Poland's central bank (NBP)’s rate-setting Monetary Policy Council (RPP) decided to leave the reference interest rate at 6.75 percent for the eighth consecutive month on Wednesday arguing that a series of external and internal factors should bring inflation down.

"The Council assessed that the weakening of the external economic conditions, together with a decline in commodity prices, will continue to curb global inflation, which will contribute to lower price growth in Poland," the council said in a statement.

"A decline in domestic inflation will be supported by a weakening in GDP growth, including consumption, amid a significant decrease in credit growth," the council said. "As a result, the Council assesses that the earlier strong monetary policy tightening, undertaken by the NBP, will lead to a decline in inflation in Poland towards the NBP's inflation target."

But the return to the target of 2.5 percent +/-1 percentage point will be gradual due to the scale and endurance of the impact of recent economic shocks.

Further moves also hinge on the CPI and growth outlook.

The statement added that: "The NBP will take all the necessary steps to maintain macroeconomic and financial stability, including, above all, to bring inflation down to the NBP inflation target in the medium term."

To achieve this, according to the statement, the NBP may use FX interventions, to be used especially if the zloty moves in the direction opposite to monetary policy goals.