Polish MPC cuts rates by 25bps as expected, says easing cycle not ended yet

By bne IntelliNews June 6, 2013

The Monetary Policy Council (MPC) has lowered interest rates again by 25bps across the board, which was a decision in line with the expectations of the vast majority of bank economists. It explained in its press release that in its view, incoming data point to weaker than expected economic growth in Poland and a stronger - than forecasted in the March projection - decline in inflation. At the same time, uncertainty about the scale and timing of the expected economic recovery in the euro area persists, which can adversely affect economic activity in Poland, central bankers argued.

The last paragraphs of the release - often underlined by both central bankers at their press conference and - analysts afterwards - reads: "The Council assesses that monetary policy easing conducted since November 2012 supports economic recovery and limits the risk of inflation running below the NBP target in the medium term." They pointed to the lack of the last sentence that features in the May release, namely: "The Council's decisions in the coming months will depend on the assessment of the incoming data with regard to probability of inflation remaining markedly below the NBP target in the medium term."

Indeed, governor of the National Bank of Poland (NBP) and MPC chairman Marek Belka said the wording of the last paragraph should not be interpreted as a signal that the policy loosening cycle has ended; quote the opposite - he openly said that this is not the case. At the same time, he did admit that we are approaching the time when the level of interest rates will be adequate to the current phase of the economic cycle. Belka pledged that MPC will deliver a more clear-cut statement next month, when NBP's new CPI/ GDP projection will be published.

These statements triggered a further depreciation of the zloty (though Belka said during the conference that MPC was not concerned with the zloty's recent weakening as it did not result from any internal factors) as market players began to realise that July may actually bring the closure of the easing cycle.

Belka also said that inflation may ease even further in coming months than April's 0.8% y/y, but he sees no risk of a deflation in annual terms. At the same time, he stressed that economic growth will probably continue to be weak in Q2 of 2013 and may not differ much from 0.5% y/y posted in Q1 of 2013.

Related Articles

Poland signs up to LNG deliveries from US

PGNiG has signed a spot deal to buy LNG from the US, the Polish state-controlled gas company said on April 27. The purchase see US LNG arrive in Central & Eastern Europe for the first time, ... more

EU warns Hungary on rule of law and migrant quotas

The EU warned Hungary on April 12 that it may face legal action over Prime Minister Viktor Orban’s underminig of democracy and the rule of law. The EU’s left-liberal wing has long been ... more

Polish core inflation surprises with strong acceleration in March

Polish core inflation gained 0.6% y/y in March, the National Bank of Poland (NBP) announced on April 12. The reading is 0.1pp above market expectations and 0.3pp higher compared to February.   ... ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss