Poland’s central bank unexpectedly holds interest rates
October 4, 2012
NBP head Marek Belka
Poland's Monetary Policy Council defied forecasts and refrained from cutting the rates in October as inflation still remains elevated and the rate setters await the confirmation of CPI and GDP trends, central bank NBP head Marek Belka told a press conference on Wednesday.
"The continuing high inflation and the willingness to become certain about the GDP and CPI [trends], that is why we wait for the [November] projection," Belka said, when asked what made the council keep the rates unchanged in October.
Polish rate council resisted the pressure and held off for another month, holding rates flat and delaying an easing cycle that markets and even council chair Belka say is only a matter of time.
The decision keeps the reference rate at 4.75%, where it has sat since council members put the presumably final touches on a tightening cycle as recently as May.
The council sees signs of continued slowdown in Q3 and stands ready to ease policy should incoming data, including the central bank's November macroeconomic projection, show "confirm that economic slowdown would become protracted," the council said in its October policy statement.
The council defines the room for possible rate cuts by the need to keep positive real interest rates, Belka said.
However, "it depends on the shape of inflation, the projection in this regard and economic growth," Belka added.
Belka told PAP Polish news agency that the council need not wait for the central bank's next inflation projection in November to make its move, but added that the situation did not require any dramatic action.