Poland’s interest rates down to 0.5%

The National Bank of Poland (NBP) has cut interest rates to 0.5 percent at the April rate-setting meeting.

Poland’s rate setters’ decision to reduce the reference rate to 0.5 percent at its April meeting came as a surprise to analysts, especially after the decision to cut rates to 1.0 percent in March, the first change to the interest rates in five years.

Analysts expected a further cut only in May, once the Monetary Policy Council (MPC) had a proper look at how inflation and growth have been reacting to the measures taken by the government to stem the recession.

Banks have granted over 400,000 mortgage holders deferment of interest charges on mortgages and loans since the end of March, as part of the stimulus package agreed with the government.

A survey of economists by the National Bank of Poland saw a consensus forecast of Polish economists that the economy would contract by between 0.5 and 4.5 percent in the second quarter of 2020.

While the new rates will be the lowest ever seen in Poland, the move echoes cuts by other countries over the past month or so in a trend of near-zero or even negative interest rates.

The Monetary Policy Council (MPC) met for one day instead of two due to the coronavirus threat and the normally lively press conference was cancelled.