Monetary council keeps interest rates unchanged

Rafał Guz/PAP

The Monetary Policy Council (RPP), the Polish central bank's rate-setting body, has kept the reference interest rate at 6.75 percent.

The National Bank of Poland's Lombard rate remained at 7.25 percent, the rediscount rate at 6.80 percent, and the discount rate at 6.85 percent, the RPP announced after its sitting on Wednesday.

The RPP also left the deposit rate unchanged at 6.25 percent.

The rate-setting body's decision was in line with the market consensus. Most analysts expected the RPP to keep the rate at the current level.

The prices of consumer goods and services (Consumer Price Index, CPI) went up by 16.6 percent year on year, and by 0.1 percent month on month in December 2022.

The RPP left rates unchanged for the fifth time running following 11 consecutive increases aimed at curbing inflation.

In a statement published after its decision, the RPP maintained its previous rhetoric, claiming that decreasing sentiment in the Polish economy and its neighbourhood, coupled with increasingly restrictive monetary policies pursued by the world's major central banks would curb inflation globally and reduce commodity prices.

The RPP defined its current monetary tightening drive as "substantial" and said the to-date rate hikes would contribute to the ultimate decline of inflation towards the central bank's inflation target of 2.5 percent plus/minus one percentage point. However, inflation is expected to remain high for a considerable time and the decline is expected to be gradual.

The Council also pointed out that the strengthening of the Polish zloty would be aligned with the economy's fundamentals and would contribute to lower inflation.