Polish Central Bank Releases Statement After MPC Meeting

The National Bank of Poland published a statement after its monetary policy meeting, during which members voted to cut interest rates by 75bp. The decision wrong-footed financial markets, which were looking for a 25bp reduction in rates.

• The central bank said that "activity growth declined in Poland" and cited disappointing Q2 GDP data as well as a "further reduction in consumption demand". They also made reference to the weak July outturns for retail sales and industrial output.
• At the same time, members pointed to a continued decline in inflation in August coupled with the expected decrease in core inflation. In their view, a reduction in cost pressures and lower economic activity growth will support disinflation going forward.
• "In the Council’s assessment, recently incoming data point to a weaker demand pressure than previously expected, which will contribute to a faster return of inflation to the NBP inflation target."
• The statement notes that the "NBP may intervene in the FX market," while the subsequent clause "in particular to limit fluctuations of the zloty exchange rate that are inconsistent with the direction of monetary policy" has been dropped.
• Forward guidance was left unchanged: "further decisions of the Council will depend on incoming information regarding prospects for inflation and economic activity."
• Click here to see the full statement.