No Change in National Bank of Poland’s 4.75% Reference Interest Rate

September 5, 2012

Narodowy Bank once again left monetary policy unchanged.  When the last of five 25-bp rate increases was administered in May of this year, officials warned that more restraint might become necessary in the absence of “signs of considerable economic weakening in Poland appear and the outlook for inflation returning to the target improves.”  It so happens that today’s statement notes that GDP was softer than expected last quarter and that inflation in July slowed to 4.0%, which still exceeds the medium-term target of 2.5%.  Officials believe inflation will continue to recede but acknowledge an upside risk to that forecast from firmer world commodity prices.  Assuming that risk stays contained, the message this month is that the next rate change will be a cut: “Should the incoming data confirm further weakening of economic conditions, and should the risk of increase in inflationary pressure be limited, the Council will consider adjustment of monetary policy.”

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



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