Press conference after the meeting of the Monetary Policy Council
The Council members explained that the latest inflation and GDP projection revealed space for a 0.5 percentage point reduction in interest rates. The March decision complements the current cycle of monetary policy easing.
At its meeting held on 5 and 6 of March 2013, the Monetary Policy Council decided to reduce interest rates by 50 basis points. As of 7 March, the reference rate will stand at 3.25% in annualised terms.
The press conference was attended by the NBP President, Prof. Marek Belka, and the Monetary Policy Council members: Prof. Andrzej Kaźmierczak and Dr Andrzej Bratkowski. The journalists enquired why the current interest rate cut was more radical than before. Prof. Marek Belka explained that such extent of possible cuts was indicated by the latest inflation and GDP projection drawn up by the NBP Economic Institute. It forecasts lower inflation in the period up to the end of 2015 than expected by the previous edition of the projection in November 2012. The current projection places the CPI index at approx. 1.5 % in the analysed period, i.e. close to the lower boundary of the band for allowable deviations from the NBP target. The Press release after the meeting of the Monetary Policy Council reads: "Taking into account the risk of inflation running below the inflation target in the medium term, the Council has decided to reduce the NBP interest rates again. The March decision complements the cycle of monetary policy easing initiated in November 2012. “
The NBP President added that in making this decision, the Council has now moved on to a stage referred to as "wait and see", which observers should take literally. In the nearest months, changes to interest rates would only be possible if developments in the economy considerably strayed from the scenario envisaged in the Projection.
The Economic Institute will present its latest Inflation and GDP projection on Monday 11 March.