WARSAW (Reuters) – Poland’s central bank left its main interest rate unchanged at 6.75% on Wednesday, as expected, as markets turned their focus to the bank’s latest inflation projections.
If the projections, which will be announced in a press release at 1500 GMT, are in line with prior forecasts that inflation will fall to single digits by the end of 2023, it will reinforce analysts’ expectations that the cost of credit will remain stable, until at least the end of the year.
Inflation was 17.2% year-on-year in January, according to statistics office data.
“The press release, and in particular the results of the new projection of inflation and GDP, will be important from the point of view of market reaction and expectations regarding the path of interest rates in the future,” said Grzegorz Maliszewski, chief economist of Bank Millennium.
“In my opinion, the results of the projection should not be an argument to change the existing ‘wait-and-see’ attitude.”
While the National Bank of Poland (NBP) has not officially ended the tightening cycle it began in 2021, the impact of the war in Ukraine on growth mean analysts see further hikes as unlikely and the focus has been on when borrowing costs could start falling.
Other central banks in the region have also kept rates on hold in recent months. In February, the National Bank of Hungary (NBH) kept the European Union’s highest benchmark steady at 13%, defying government pressure to cut borrowing costs amid a sharp economic slowdown.
(Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz, Anna Wlodarczak-Semczuk, Karol Badohal, Editing by Christina Fincher)
