The Narodowy Bank Polski's Monetary Policy Council kept the benchmark 7-day interest rate unchanged at 4.50%. The Bank said: "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, as well as a likely global economic slowdown. On the other hand, the impact of the situation in the global financial markets on the zloty exchange rate constitutes an upside risk factor to domestic price developments."
The Bank also kept the following interest rates unchanged: the rediscount rate at 4.75%, the Lombard rate at 6.00%, and the deposit rate at 3.00%. The Bank last raised the interest rate by 25 basis points to 4.50% in June this year, and held the interest rate unchanged at its previous meeting.
Poland reported annual headline inflation of 4.3% in August, up slightly from 4.1% in July, with previous readings of 4.2% in June, 5% in May, 4.5% in April, 4.3% in March, and higher than the Bank's official inflation target of 2.5% +/- 1%.
The IMF recently reduced its forecast for Poland's 2011 economic growth rate to 3.8% from 4% previously. The Polish Zloty (PLN) has weakened by about 13% against the US dollar so far this year; the USDPLN exchange rate last traded around 3.30.