At a meeting on September 23 and 24, the Monetary Policy Council did not raise central bank interest rates.

NBP (Monetary Policy Council): In August the annual growth in consumer prices in Poland was lower than expected and stayed at 4.8%. However, it was still above the NBP’s inflation target of 2.5% and above the upper limit of deviation from the target of 3.5%. Inflation remained at a high level mainly due to a fast, though decelerating, increase in prices of food and fuels, and accelerating prices of some services and energy. The Council maintains its assessment that inflation will remain above the upper limit of deviation from the target in coming months, which will be largely due to rising food and regulated prices, including energy prices. The Council believes that the upward pressure on wages is likely to continue in coming quarters. But with a gradual slowdown of the economy, reduced demand for labour and deteriorating financial situation of businesses the pressure on wages and consequently inflationary pressure should be diminishing. The higher inflation rates expected in coming quarters will be largely due to an increase in regulated prices and the food and fuel price hikes which have been observed in the global economy and have affected the Polish market. Inflation may also be pushed up by growing prices of some services, driven to some extent by higher energy prices. Prolonged high inflation carries the risk of permanently raised inflationary pressure, and in consequence second-round effects.
In the medium term inflationary pressure may be weakened by a global economic slowdown and the resulting slowdown of the Polish economy. Imports of goods from countries with low manufacturing costs are expected to continue to ease inflationary pressure. The recent interest rate hikes and a strong zloty are additional factors which will be pushing inflation down. The Council believes that in the medium term the probability of inflation overshooting the inflation target is still higher than the probability of its running below the target. As a result, the Council does not rule out the need to further tighten the monetary policy in order to bring inflation down to the target in the medium term. In view of the increased uncertainty about the scale of a slowdown in the Polish economy, the Council came to the conclusion that a fuller assessment of the inflation outlook would be possible after it has analysed data to be released in the near future and the October inflation and GDP projection. As the Council is trying to bring inflation down to the target in the medium term, it will be closely monitoring the growth and structure of domestic demand, the relation between wage and labour productivity growth in the commercial sector, growth in wages in the public sector, the degree of the expansionary fiscal policy stance, the zloty exchange rate and developments of the current account balance. The Council will also be analysing changes in the external environment and their influence on prospects for economic growth and inflation in Poland. (“Report from the Monetary Policy Council Meeting on September 23-24, 2008”; www.nbp.pl)

Interest rates on September 30, 2008:
- reference (intervention) rate – 6.00% annual,
- lombard rate (official lending rate): 7.50% annual,
- deposit rate: 4.50% annual,
- rediscount rate: 6.25% annual.

On the Warsaw Stock Exchange, stock prices were very volatile and continued to drop in September. On Friday, August 28, the WIG-20 blue-chip index and the WIG index of all companies listed on the Warsaw Stock Exchange were by around 10% and 12% lower than at the end of June.