WARSAW: Poland’s central bank stuck to its wait-and-see approach on interest rates on Thursday, leaving the cost of credit at 5.75% for the seventh month in row as it looks ahead to what economists say will be rising inflation in the coming months.
At 2.4%, Poland’s April flash CPI reading was within the central bank’s 1.5-2.5% target range.
However, with government measures to keep food and energy prices down being phased out economists say inflation will climb in the second half of the year.
“The decision to leave interest rates unchanged did not surprise anyone,” said Piotr Bielski, director of the economic analysis department of Santander Bank Polska.
“The Monetary Policy Council remains in wait-and-see mode, waiting for further signals from the economy that will allow it to predict future trends in economic growth and inflation with greater confidence.”
All 26 analysts in a Reuters poll expected interest rates to remain stable.
Poland’s government raised VAT on food staples to 5% from zero in April, rolling back a measure that had been designed to help households cope with soaring inflation.
The government will raise a cap on power prices for households, and while this has removed a further element of uncertainty concerning the future path of inflation, its exact impact on the central bank’s next set of economic forecasts remains to be seen.
Markets will now be looking to a press conference with Governor Adam Glapinski scheduled for Friday for clues as to the central bank’s thinking following the announcement of the new price cap.
“It will be interesting for me to see what inflation forecast the governor of the National Bank of Poland will present for the end of this year, knowing the draft law on energy prices adopted by the government,” said Bielski.
“However, I will not be surprised if there is no specific answer on this topic and Governor Glapinski announces that the Council is awaiting the results of the next NBP projection.”
At 2.4%, Poland’s April flash CPI reading was within the central bank’s 1.5-2.5% target range.
However, with government measures to keep food and energy prices down being phased out economists say inflation will climb in the second half of the year.
“The decision to leave interest rates unchanged did not surprise anyone,” said Piotr Bielski, director of the economic analysis department of Santander Bank Polska.
“The Monetary Policy Council remains in wait-and-see mode, waiting for further signals from the economy that will allow it to predict future trends in economic growth and inflation with greater confidence.”
All 26 analysts in a Reuters poll expected interest rates to remain stable.
Poland’s government raised VAT on food staples to 5% from zero in April, rolling back a measure that had been designed to help households cope with soaring inflation.
The government will raise a cap on power prices for households, and while this has removed a further element of uncertainty concerning the future path of inflation, its exact impact on the central bank’s next set of economic forecasts remains to be seen.
Markets will now be looking to a press conference with Governor Adam Glapinski scheduled for Friday for clues as to the central bank’s thinking following the announcement of the new price cap.
“It will be interesting for me to see what inflation forecast the governor of the National Bank of Poland will present for the end of this year, knowing the draft law on energy prices adopted by the government,” said Bielski.
“However, I will not be surprised if there is no specific answer on this topic and Governor Glapinski announces that the Council is awaiting the results of the next NBP projection.”
