Polish Central Bank Rate to Stay at 3.5%

March 31, 2010

The Monetary Council of the Narodowy Bank decided as expected to keep its seven-day reference rate at 3.5%, where such has been since mid-2009.  Officials released a statement that predicted slower growth in 1Q10 than in 4Q09 and than had been assumed previously, citing recent setbacks, perhaps weather-related, in retail sales and construction activity. Inflation is decelerating because of zloty appreciation against the euro, softer wage trends, and favorable base effects.  The CPI recorded a 12-month rise of 2.9% in February, down from 3.5% at end-2009, and is expected to fall below the 2.5% target after midyear.  Credit growth remains slow and the jobless rate exceeds 10%.  During the Great Recession, the central bank rate was reduced four times by 25 basis points (November 2008 and February, March and June of 2009) and twice by 75 bps (December 2008 and January 2009). A rate increase before late 2010 appears doubtful.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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