Key Polish Central Bank Rate Kept at 4.5% as Expected

February 8, 2012

At the National Bank of Poland, also known as Narodowy Bank, the monetary policy reference rate was left unchanged as were the 3% deposit rate and 6% Lombard rate that flank it symmetrically.  Four 25-basis point increases were implemented in the first half of 2011 but none since June 8 of last year.  The reference rate had been just 3.5% from June 2009 until August 2011 following 250 bps of reductions between November 2008 and mid-2009.  A 4.6% December-over-December rate of CPI inflation was up from 4.3% last October and almost twice as much as the 2.5% medium-term target.  Officials expect inflation to subside on slower global and domestic growth and the diminishing impact of higher commodity prices last year, a VAT increase then, and depreciation of the zloty.  But doubt is expressed about this baseline view of lessening growth in domestic demand and falling inflation, and a statement on the central bank’s website explicitly does not rule out additional future interest rate increases if the prognosis deteriorates for a return to in-target inflation.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.