Head of Polish Central bank: current rates promote balanced growth

Photo: Shutterstock / ToRz

The Polish Monetary Policy Council announced on Wednesday that it will not change the interest rates for 34th month

The reference rate will remain at 1.50 percent, the RPP said in a statement after its Wednesday meeting. This means that the National Bank of Poland's Lombard rate will stay at 2.50 percent, the deposit rate at 0.50 percent, and the rediscount rate at 1.75 percent.

Chairman of National Bank of Poland (NBP) prof. Adam Glapiński said on the press conference that the prosperity of the global economy was the reason why interest rates remain unchanged. “The current level of rates helps the Polish economy to remain on the path of balanced growth and maintain the macroeconomic balance”, said Mr Glapiński.

The last change of interest rates in Poland was made 38 months ago in March 2015, when the previous squad of RPP decreased them. This is the longest period of interest rates stability in the whole history of setting them by the Council.

In January, Mr Glapiński said in an interview with “Dziennik Gazeta Prawna” daily that in his opinion interest rates in Poland may remain unchanged even until the half of 2019, but he would not be surprised if there was a necessity to increase them.

USD most expensive since November

On Wednesday afternoon the exchange rate for the American dollar reached the highest level since November 2017.

The dollar rate reached PLN 3.64 for one USD. In last month the price for American currency soared by nearly PLN 0.30.

It is possible American Federal Reserve System (commonly known as Fed) will increase interest rates in the US in June. The increasing distance between the percentage of Polish and American debt makes PLN less attractive for investors. Moreover, Fed is planning further increases of the interest rates, which may be more unbeneficial for Polish currency. In the long term, this may put pressure on Polish interest rates to rise, so that Polish bonds, a ready source of finance for a government running a deficit, do not lose their attraction for foreign investors.

The EUR rate remains stable. The most important issue in the short term remains the exchange rate of USD to EUR, as the European currency fell to the lowest level since December. Now one EUR is priced for USD 1.18, while in April it was USD 1.24.

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