National Bank of Poland Cuts Main Reference Rate by 75 Basis Points to 5.0%

December 23, 2008

A 75-bp rate reduction surpassed expectations for a 50-bp cut. Along with an easing in November of 25 basis points, the central bank has reversed four earlier increases this year of 25 basis points each January, February, March and June and thus restored interest rates to their levels at the start of this year. More reductions are probable in 2008 in line with domestic and global growth and price trends.

A released statement at this hour forecasts projects a drop to in-target inflation soon, a significant decline in domestic growth, a weaker labor market, deteriorating corporate finance, and tighter bank lending. Officials attach greater probability to below-target inflation in the medium term and above-target inflation. The central bank’s reference rate was at 4.0% in mid-2006.


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