Poland's central bank, which earlier today kept its reference rate steady, said it still expects to keep rates unchanged "at least until the end of the first half of 2014" as the gradual economic recovery is likely to continue in coming quarters while inflationary pressures remain subdued.
The National Bank of Poland (NBP), which cut rates by 225 basis points from November 2012 through July 2013, said economic data from November indicates "a continuation of the gradual recovery" and the past rate cuts "supports recovery of the domestic economy, gradual return of inflation to the target and stabilization in the financial markets."
After its last rate cut in July, the NBP said the cycle of easing and then in November it pushed back any rate rise until at least the end of June 2014 and today repeated this guidance.
The central bank said data on industrial output and retail sales suggest that activity in these sectors remain on an upward trend while the decline in construction and assembly output has eased, indicating some improvement. Business climate indicators also signal further growth in economic activity.
But employment growth remains too weak to bring down the still elevated unemployment rate, which reduces wage and demand pressures.
Poland's inflation rate fell to a five-month low of 0.6 percent in November from 0.8 percent in October, well below the NBP's 2.5 percent target. The central bank said most core inflation indices also fell along with producer prices, which indicates low cost pressures in the economy.
The central bank said the euro area was slowly recovering, yet the pace was limited and diversified across member countries and with moderate growth in global economic activity, inflation should stay low in many countries.
Poland's Gross Domestic Product expanded by 0.8 percent in the third quarter from the second quarter for annual growth of 1.9 percent, up from 0.8 percent. In November the Organisation for Economic Co-operation and Development (OECD) raised its forecast for Polish growth in 2013 to 1.4 percent and the 2014 forecast to 2.7 percent. In 2012 Poland's economy grew by 1.9 percent.