Poland central bank cuts key rate further

MNB

Photo by Lanski/Shutterstock.com

The Narodowy Bank Polski (National Bank of Poland or NBP) unexpectedly cut interest rates by 50 basis points and said it will do whatever is needed to fight the coronavirus crisis on April 8, according to Polish News Agency PAP and international wire service Reuters. 

Photo by Lanski/Shutterstock.com

The central bank move is a part of a broader program conducted with the government to fight the negative impact of the coronavirus outbreak. The NBP cut its benchmark rate for the second month in a row to a new all-time low of 0.5%.

Policymakers expect economic activity to gradually recover further ahead, supported by fiscal measures, as well as the strong macroeconomic fundamentals of the Polish economy.

They expect inflation to fall below the target due to a global slowdown and, lower commodity prices and weaker demand. The central bank also said it will continue to provide liquidity to the banking sector using repo transactions and will purchase government securities and government guaranteed debt securities on the secondary market as part of the structural operations.

The Lombard rate was lowered to 1% from 1.5%, while the deposit rate was cut to zero. The rediscount rate was slashed to 0.55% from 1.05%, the news agencies said.

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