Poland skyline at golden hour

Poland Monetary Policy March 2020

Poland: Central Bank slashes rates in extraordinary meeting in March

The National Bank of Poland (NBP) slashed the reference rate from 1.50% to a record low of 1.00% at an extraordinary monetary policy meeting held on 17 March in a bid to shield the economy from the negative spillovers from the spread of coronavirus. In addition, the Central Bank cut the Lombard rate to 1.50% and the rediscount rate to 1.05%, while leaving the deposit rate stable at 0.50%. At the same time, the Bank introduced a series of strong measures aimed at granting liquidity, contributing to the normal functioning of the banking system, supporting financial markets and thus tackling the economic shock from coronavirus.

The Bank cut the reserve requirements ratio from 3.5% to 0.5% and increased the remuneration of required reserves from 0.5% to 1.0% (pegging it to the reference rate level), in an effort to keep lending channels wide open and support commercial banks. For the same purpose, it will provide liquidity to the banking sector by extending repo operations and will refinance new loans granted to companies and households under favorable interest rates conditions. Last but not least, the NBP introduced the first Polish quantitative easing program, announcing it will purchase government bonds in the secondary market, providing liquidity to the government bond market and keeping yields in check in an attempt to minimize the risk of contagion from the sovereign to the financial sector.

Looking ahead, significant uncertainty stems from the duration of the coronavirus outbreak and the associated containment measures, which will take a heavy toll on the economy and will contribute to a marked decrease in inflation in the short- to medium-term.

The next monetary policy meeting is scheduled for 7–8 April.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen