Poland again keeps reference rate at 4½%; forecasts call for slowdown

By Susanna Moon

Chicago, Oct. 6 - National Bank of Poland's Monetary Policy Council said it again decided to maintain the bank's reference rate at 4½%, unchanged since a quarter point bump in June, at its meeting on Tuesday and Wednesday.

In August, annual Consumer Price Index inflation rose to 4.3%, above the bank's inflation target of 2.5%, and will remain high in coming months due to global commodity price spikes, according to a bank press release. Meanwhile, Producer Price Index inflation accelerated.

Inflation in the medium term will be curbed by an expected drop in domestic economic growth amid fiscal tightening, including reduced public investment spending, and interest rate hikes in the first half of the year as well as a likely global economic slowdown, the council noted.

"On the other hand, the impact of the situation in the global financial markets on the zloty exchange rate constitutes an upside risk factor to domestic price developments," the release noted.

The council raised the rate to 4¼% in May and to 4% in April.

The Lombard rate remains unchanged at 6%, and the rediscount rate is 4¾%.

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