Saturday, November 12, 2011

National Bank of Poland Holds Rate at 4.50%

The Narodowy Bank Polski's Monetary Policy Council kept the benchmark 7-day interest rate unchanged at 4.50%.  The Bank said: "the medium term inflation will be curbed by somewhat lower 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 the expected global economic slowdown. Such an assessment is also supported by the November projection of inflation and GDP. The impact of the situation in the global financial markets on zloty exchange rate continues to be an upside risk 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 3.9% in September, compared to 4.3% in August, 4.1% in July, with previous readings of 4.2% in June, 5% in May, 4.5% in April, 4.3% in March, and just 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 10% against the US dollar so far this year; the USDPLN exchange rate last traded around 3.19.


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