National Bank of Poland Keeps 2.5% Seven-Day Repo Rate

February 5, 2014

Poland’s record low central bank interest rate was kept in spite of recent weakness in the Zloty.  It has been 2.5% since a 25-basis point cut last July, which culminated an eight-move 225 basis point easing that began in November 2012.  A statement released by officials at Narodowy Bank acknowledged the challenges faced by emerging economies including Poland, and which has been manifested in the Zloty’s deprecation.  The statement also notes an acceleration of GDP growth between the third and final quarters of 2013 and predicts continuing recovery led by exports but with the participation as well of domestic demand.  Lending to the private sector has strengthened but remains lower than desired.  Most importantly from the standpoint of justification for the continuing very accommodative monetary policy stance, inflation continues to be subdued both in the headline CPI (0.7% December-over-December) and the core measure of underlying inflation.  Expected inflation is low, too, so the statement reaffirms the wish of officials that the 2.5% interest rate not be raised before at least midyear.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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