Poland Monetary Policy


Central Bank leaves interest rates unchanged in December

At its latest monetary policy meeting held on 21-22 December, the Central Bank decided to leave interest rates unchanged at the record low level of 3.50%. This decision maintained the Central Bank's monetary policy stance for the 18th consecutive month. Monetary authorities claimed that the global economic recovery is still lagging, particularly due to the negative shocks caused by fiscal austerity measures in several developed economies. As December's inflation has now exceeded the 2.5% target - although remaining within the 1 percentage point tolerance margin - the Central Bank is expected to raise interest rates in the first quarter of 2011, after a comment from its Governor Marek Belka, who stated that ?rates should be raised pre-emptively?. Possible monetary tightening is likely to benefit the zloty, which is expected to further appreciate, hence reducing inflationary pressures in the economy. The Monetary Policy Council (MPC) confirmed the inflation target for 2011 at 2.5% with a tolerance margin of 1 percentage point. The next monetary policy meeting is set for 18-19 January 2011.


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