Poland Monetary Policy


Poland: Central Bank holds interest rates at its first meeting in 2012

January 11, 2012

At its 10-11 January monetary policy meeting, the Central Bank left interest rates unchanged at 4.50% for a seventh consecutive month, in a move that was widely expected by the market. Interest rates have thus remained unchanged since June, when the Bank raised rates by 25 basis points. The National Bank of Poland (NBP) cited weakening growth in the Euro area and heightened volatility in the financial markets as the main factors behind its decision. The Bank also stressed that the domestic economy has performed relatively well in the final quarter of 2011, although it expects slower economic growth throughout 2012. The Central Bank maintained its opinion that ?in the medium term inflation will be curbed by gradually decelerating domestic demand amidst fiscal tightening, including reduced public investment spending, and interest rate increases implemented in the first half of 2011, as well as the expected global economic slowdown.? At the same time, monetary authorities warned that ?the impact of the situation in the global financial markets on the zloty exchange rate together with a possible rise in commodity prices continues to be an upside risk to domestic price developments.? On 30 December, the zloty traded at 4.47 per EUR, which represented a 0.9% increase compared with the previous month. Overall, in 2011, the zloty dropped 12.6% versus the EUR.


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