Polish central bank surprises with decision to hold rates

By Anna Koper

WARSAW (Reuters) – Poland’s central bank kept its main interest rate steady at 6.75% on Wednesday, it said, in a surprise move that follows a year of policy tightening that has so far failed to stop inflation rising and which economists say will weigh on growth.

Policymakers had signalled that the end of the rate-hike cycle is near, but with inflation rising to 17.2% in September most economists had predicted that the cost of credit would continue to rise.

Economists polled by Reuters had expected the main rate to rise to 7.00%.

“The Council assessed, that the hitherto significant monetary policy tightening by NBP… will contribute to curbing demand growth in the Polish economy, which will support a decline in inflation in Poland towards the NBP inflation target,” the banks said in a statement.

The bank said that it expected economic growth to slow in the coming quarters.

The Polish zloty was 0.38% weaker against the euro following the decision.

The Polish decision follows similar moves in Hungary and the Czech Republic.

In Hungary the central bank raised its base rate by a larger-than-expected 125 basis points to 13% in September but said it was ending its rate-hike cycle amid a slowing economy, while in the Czech Republic policymakers kept rates steady at 7.00% for a second time in a row.

Romania’s central bank lifted its benchmark interest rate by a more than expected 75 basis points to 6.25% on Wednesday.

Source link