Polish Monetary Policy on Hold

March 7, 2012

Officials at the Narodowy Bank, who meet monthly, left their reference interest rate at 4.5%, its level since June 8, 2011.  CPI inflation of 4.1% remains well above the 2.5% target but is projected to drop near to such by late 2013.  New forecast ranges for inflation and growth were unveiled in the central bank’s new statement.  Growth is expected to slow to a range of 2.2-3.6% next year and 1.2-3.0% in 2014.  Inflation prospects recently brightened, as the zloty reversed some of last year’s losses, and expected inflation eased in January.  The statement leaves open the door to additional restraint: "The Council does not rule out the possibility of further monetary policy adjustments in the future, should the positive signs of economic activity in Poland continue and the outlook for inflation returning to the target fail to improve."  In January, April, May and June of 2011, rate increases of 25 basis points each were implemented.  Earlier from November 2008 through June 2009, the reference rate was slashed from 6.0% to an all-time trough of 3.5%.

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



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