Wednesday, February 5, 2014

Poland maintains rates, still sees steady rates until end-H1

    Poland's central bank maintained its reference rate at 2.50 percent, as expected, expects the economic recovery to continue in coming quarters amid subdued inflationary pressures and reiterated that policy rates should be "kept unchanged at least until the end of the first half of 2014."
    The National Bank of Poland (NBP), which cut rates by 225 basis points from November 2012 through July 2013, said preliminary data show that economic growth in the fourth quarter of 2013 exceed the third quarter, with exports still contributing substantially. Data on industrial output and retail sales, along with a leveling off of the decline in construction and assembly output, confirms the revival.
    After ending its cycle of easing in July, the central bank in November pushed back the date for any rate rise until the end of June this year and has maintained this view since then.
    Poland's Gross Domestic Product grew by 0.6 percent in the third quarter from the second, the fifth consecutive quarter of accelerating growth. Compared with the third quarter of 2012, GDP was up by 1.9 percent, up from 0.8 percent in the second quarter.

    The NBP said the recovery was improving the conditions in the labour market with signs of a growth in employment. However, unemployment remains at elevated levels, hampering wage pressure.
    Poland's unemployment rate rose to 13.4 percent in December, up from November's 13.2 percent.
    Lending to the private sector has accelerated slightly, the central bank said, though it remains  limited and growth in lending to enterprises and households was low. Since mid-2013, however, there has been a gradual acceleration in consumer loans.
     Inflation in Poland is well below the central bank's target of 2.5 percent, plus/minus one percentage point. In December headline inflation rose marginally to 0.7 percent from November's 0.6 percent.
    Core inflation is also low, the NBP said, confirming weak demand pressures, and a further decline in producer prices showed weak cost pressures. Inflation expectations are also low.
    Last week one of the board members of the central bank, Jerzy Hausner, said the NBP was likely to raise rates in the second half of this year if projections in March confirm that the economic recovery is gaining strength.


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