National Bank of Poland Cuts Reserve Requirements

May 27, 2009

Polish monetary officials left their key interest rate at 3.75% as was expected but took a different easing step of reducing reserve requirements from 3.5% to 3.0%.  Interest rates also were left unchanged at April’s policy meeting.  Earlier cuts of 25 basis points each were announced last November 26, February 25 and March 25 and of 75 basis points each on December 23rd and January 27th.  The year-on-year rate of CPI inflation rose 4/10ths in April to 4.0%, a full 1.5 percentages points above target.  Officials also must proceed carefully because of fiscal deficit concerns and the zloty’s susceptibility to selling pressure.  GDP expanded 4.9% last year but just 2.9% in the year to 4Q08.  Growth in 2009 could be either moderately in the black or red.  Opinions differ on the likely sign.  The statement released at the time of announcement but before the bank’s press conference only gave details of actions taken.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.


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