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Poland: Key Rate to Remain Low

Published: October 24, 2013; 19:30 · (Vindobona)

In order to support the positive growth trend, the Polish National Bank (NBP) will keep the key rate flat next year. Poland´s economic growth is mainly based on foreign demand, though.

Poland: Key Rate to Remain Low / Picture: © Vindobona.org

At the moment, Poland´s key rate stands at 2.50%. In Poland´s history, this is a record low. Between November 2012 and July 2013, the key rate was cut by 225 bps. Due to the fragile economic growth, NBP will hold the interest rate at its record low next year, economists say. What is more, there is no pressure from inflation, NBP´s governor Marek Belka said.

In the first quarter of 2013, Poland´s economic growth rate reached 0.4%. In the second quarter, GDP growth was up to 1.1%. Until the end of this year, the GDP growth is expected to come at 2.0%. In 2013, the annual growth rate is estimated to reach 1.3%. In total, Poland´s economic recovery is not robust enough to raise the interest rates, economists at NBP argue. According to the IMF, the anticipated GDP growth is 2.5% in the years from 2013 to 2018.

Anyway, the economic acceleration is not due to the monetary cuts. The improving growth is mainly driven by net exports to the Eurozone. 52% of Poland´s exports are bought by the Eurozone. Since 2008, domestic demand contributes less and less to GDP growth. In the last five years, Poland´s domestic demand has been stagnating. This is mainly due to the weakening purchasing power. For the first time since 20 years, Poland´s real income fell in 2012.

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