Interest rate cuts more likely on weaker economy
August 19, 2014
Poland faces an increased probability of interest rate cuts in the fall in the light of the recent economic developments, with the room for potential monetary easing seen at 25-50 bps, Monetary Policy Council member Anna Zielinska-Glebocka told PAP Polish news agency.
"The chances for easing monetary policy rose, although one of course needs to remain cautious," Zielinska-Glebocka said. "Nothing is settled yet. However, the situation has changed. In my opinion the recent macro developments bring us closer to a decision on an interest rate cut."
The room for cuts is estimated at 25-50 bps, a move potentially tailored at "adjusting to new conditions," she added.
The exact timing remains a matter of discussion, but expect a decision in the fall, the rate setter said.
"It is hard to say whether it will be September or October," she said. "There will likely be a discussion on whether to continue with interest rates stabilization or to make some changes."
A cut "would be merely a signal showing that the council is aware of the slowing economic growth amid lack of inflation pressures," she added.
The rate council now operates in an different environment, one of waning hopes for robust growth, a "painful" Russian embargo on food products and poor sentiment among purchasing managers, Zielinska-Glebocka said.
At its most recent sitting in July, the MPC held rates unchanged but dropped the vow to refrain from any moves until the end of Q3 and said it would now hinge its decisions on incoming data.