Polish rate setters hold again as spike in inflation causes little stir

By bne IntelliNews June 6, 2019

Poland’s Monetary Policy Council (MPC) left interest rates at their current record low of 1.5% on June 5, hinting once again that no tightening of monetary policy is currently on the cards.

Fast economic growth accompanied by only moderate inflation provides no premises for a change in monetary policy, was the tone of the MPC’s statement.

Poland’s CPI growth came in at 2.3% y/y in May, adding 0.1pp to the annual expansion recorded in April, Poland’s stats office GUS reported in a flash estimate earlier this month. The rate of expansion decelerated from 0.5pp the preceding month.

Given the current high rate of economic growth, inflation rising is normal but the current rate of price growth should not be a cause for concern, the governor of the NBP and the MPC head Adam Glapinski told a press conference held after the announcement of the decision.

The NBP’s most recent inflation projection assumes CPI growth at 1.2%-2.2% in 2019, compared to the November outlook of 2.6%-3.9%.

CPI is then forecast to accelerate to 1.7%-3.6% in 2020 (1.9%-3.9% previously) and 1.3%-3.5% in 2021.

The NBP expects GDP to grow 3.3%-4.7% in 2019 (2.7%-4.4% in the previous outlook) and 2.7%-4.6% (2.3%-4.2%) in 2020. GDP growth is expected at 2.4%-4.3% in 2021.

The CPI and GDP estimates will be revised in July.

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