The National Bank of Poland reduced the base rate by 0,25% points to 3%

The monetary council of the National Bank of Poland reduced the base rate by 0,25% points to 3%. Such a low level hitherto never happened. Economists and Analysts showed their big surprise on this base rate decision, insofar as the President of the National Bank of Poland, Mr. Marek Belka, announced something totally different following the significant base rate reduction by 0,5% points in March this year. Mr. Belka thus spoke from a correction of his announcement from before two months and pointed to the fact, that there are ongoing question marks on an economic revival in the EURO-zone. It is absolutely unknown, whether the up-turn takes place at all and how large it will turn out. This uncertainty might weigh negatively on the activities of the Polish companies, what simultaneously increases the chances that the low inflation will linger. Nevertheless the National Bank of Poland sticks to its’ prognosis, that the Polish economy will revive in the coming quarters. More important than the growth rate of the gross national products remains its’ structure said Mr. Belka. There is furthermore stagnation with respect of the capital expenditures, and the private consumption stays reticent. “We are of the opinion that the Polish National Economy cannot move forward over a longer period of time propelled ahead by only one engine, that is to say the net export.” Mr.Belka corroborated indeed, that the current struck decision on reduction of base rate shall not be understand as the outset of a cycle of further interest rate decreases, notwithstanding the majority of market participants expects already for June a further drop in rates, as the real interest rate in Poland belongs to the highest in Central Europe.

Source: Economic market Poland, Issue 198, 05/2013