Poland again holds reference rate at 2½% as inflation keeps dropping

By Susanna Moon

Chicago, Jan. 8 - National Bank of Poland's Monetary Policy Council again decided to keep its reference rate unchanged at 2½% at a meeting held on Tuesday and Wednesday.

The decision reflects the bank's position, as stated last month, that gradual economic recovery is likely to continue in the coming quarters but that inflationary pressures will remain subdued, according to a bank notice.

Consumer Price Index inflation fell to 0.6% in November 2013 from 0.8% in October, which is well below the bank's inflation target of 2.5%, the bank noted.

The drop went along with a fall in most core inflation indexes, and producer prices in industry also continued to fall, pointing to low cost pressure in the economy. Inflation expectations stayed low as well.

Moderate growth in global economic activity will keep inflation low in many countries, the bank said.

The council again maintained its position that interest rates be held steady at least until the end of the first half of 2014.

The bank reiterated that, after lowering rates in the first half of the year, keeping them unchanged in subsequent quarters supports recovery of the domestic economy, gradual return of inflation to the target and stabilization in the financial markets, the bank said.

Poland last cut the reference rate was cut to 2½% from 2¾% on July 3, 2013.

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