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NBP and EBC maintain interest rates unchanged

ECONOMYNBP and EBC maintain interest rates unchanged
  • As expected, the National Bank of Poland (NBP) has left interest rates unchanged. The main interest rate stays at 5.75% for the fifth month in a row. The Lombard rate (6.25%) and deposit rate (5.25%) also remained at the same level. Consumer inflation in January sharply decelerated to 3.9% year on year, getting close to the target range of 1.5%-3.5%. The NBP maintained the rates unchanged due to uncertainty regarding the development of the Consumer Price Index (CPI) inflation in the coming months (this includes concerns about the impact of energy price easing or the abolition of the zero VAT rate on food). The rhetoric of the NBP President A. Glapinski remains hawkish.
  • The European Central Bank (ECB) also left interest rates unchanged (discount rate 4%, main rate 4.5%). The last time the ECB raised rates was in September 2023. In its new forecast, the European Central Bank expects a quicker fading of consumer inflation in the Eurozone (Harmonized Index of Consumer Prices inflation is predicted to slow to 2.3% this year and 2% in 2025, according to the ECB). The data for services PMI in Germany and the Eurozone was revised upwards for February, and activity in the Eurozone rose above the neutral 50 points for the first time in 7 months (50.2 points). The ADP job market report from the US fell short of market expectations in February (140k jobs versus estimated 149k).
  • The euro performed well against the dollar on the EUR/USD currency pair, strengthening to 1.094 on Monday. In the first half of the week, the Polish zloty significantly strengthened against the euro and oscillated in a broader area of 4.30 PLN/EUR for the rest of the week. The zloty also fared well on the currency pair with the US dollar, dropping below the level of 3.95 PLN/USD.


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