Poland keeps reference rate at 2½%; December sees 0.7% inflation

By Angela McDaniels

Tacoma, Wash., Feb. 5 - National Bank of Poland's Monetary Policy Council again decided to keep its reference rate unchanged at 2½% at a meeting held Tuesday and Wednesday.

The Lombard rate is 4%, the deposit rate is 1%, and the bill discount rate is 2.75%.

Consumer Price Index inflation increased slightly to 0.7% in December from 0.6% in November but remains well below the bank's 2.5% inflation target.

The council expects inflation to remain low. Core inflation stayed low in December, confirming to the council that demand pressure continues to be weak, and weak cost pressure in the economy has manifested as a further decline in producer prices.

The council believes that interest rates should be kept unchanged at least until the end of the first half of 2014.

Data on domestic economic activity indicates a continuation of the gradual recovery in Poland, according to the council. Preliminary 2013 GDP figures show that economic growth in the fourth quarter exceeded that in the third quarter.

The council said the gradual economic revival can also be confirmed by data on industrial output and retail sales and a leveling off in the decline of construction and assembly output.

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

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