Polish Monetary Policy Paused

July 6, 2011

The Narodowy Bank’s Monetary Policy Council left its 7-day reference rate unchanged at 4.5% following verbal hints over the past month that further increases now were unnecessary.  The rate had been raised by 25 basis points each on January 19, April 5, May 11, and June 8.  At the March meeting, officials also had decided to leave rates as is.  This pause should prove longer-lived than that one did, as global economic prospects have softened and become more uncertain.  January’s increase was the first hike since June 2008.  The 6,0% Lombard, 3.0% deposit, and 4.75% rediscount rates were also not changed.  A vote to narrow the rate corridor of the Lombard and deposit rates in June had been rejected, and some council members then had not favored the last rate hike.  CPI inflation of 5.0% in May has been driven higher by external factors, and officials expected such to trend lower.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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