Poland: Central Bank stays put on interest rates
October 5, 2011
At its 4-5 October monetary policy meeting, the Central Bank left interest rates unchanged at 4.50% for a fourth consecutive month, in a move that was widely expected by the market. Interest rates have remained stable since June, when the Bank withdrew additional monetary stimulus from the economy and raised rates by 25 basis points. The decision of the National Bank of Poland (NBP) mainly reflected a worsening of the global economic scenario as well as the recent weakening of the Polish zloty, which depreciated 6.0% versus the EUR in September (11.9% versus the USD), the sharpest depreciation since December 2008. The Central Bank stressed that ?in the medium term, inflation will be curbed by the anticipated decline in domestic economic growth amidst fiscal tightening, including reduced public investment spending, and interest rate increases implemented in the first half of 2011.? However, policy makers warned that ?the impact of the situation in the global financial markets on the zloty exchange rate constitutes an upside risk factor to domestic price developments.?