Monetary Policy Council keeps interest rates unchanged

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 (NBP)'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 Tuesday.

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. Economists believe that if rates are cut this year it will happen in the second half, with some believing cuts will not occur before 2024.

June's decision was the ninth time running the RPP had left interest rates unchanged, following 11 consecutive increases aimed at curbing inflation.

Prices of consumer goods and services (Consumer Price Index, CPI) rose by 13.0 percent year on year and were unchanged month on month in May 2023, the Central Statistical Office (GUS) reported on May 31.

The RPP said in a statement from the June sitting that the central bank NBP would take all necessary steps to gradually bring inflation back to the NBP target of 2.5 percent plus/minus one percentage point.

"NBP will continue to take all necessary actions in order to ensure macroeconomic and financial stability, including above all bringing inflation down to the NBP inflation target in the medium term," the statement read.

According to the RPP, "the weakening of the external economic conditions, together with a decline in commodity prices, will continue to curb global inflation, which will still contribute to lower price growth in Poland.

"The decline in domestic inflation will be supported by a weakening of GDP growth, including consumption, amid a significant decrease in loan growth. As a result, the Council assesses that the earlier strong monetary policy tightening undertaken by NBP will lead to a decline in inflation in Poland towards the NBP inflation target," the statement read.