Poland’s Monetary Policy Council (MPC) has lowered interest rates by 25bps to a new record low in a move expected by the market and said the current easing cycle has come to an end. The reference rate was cut to 2.5%, the Lombard rate to 4%, the deposit rate to 1% and the rediscount rate to 2.75%, the council said in a statement on the central bank's website.
Poland started its easing cycle in November to help the slowing economy. The MPC said that economic activity in the second quarter remained weak as indicated by data on industrial output, construction and assembly output as well as retail sales. The persistent low economic activity supports weak wage growth and lending growth to the private sector remains limited. The central bank expects from the second half of 2013 a gradual acceleration of the GDP supported by a recovery in the global economic activity. Yet, the risk of inflation running below its target of 2.5% exists in the mid-term so the bank decided to lower the rates.
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