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Polish central bank holds rate unchanged

The rate stands at an all-time low of 3.5 percent.

The Polish zloty and bonds were unchanged immediately after the Monetary Policy Council (MPC) decision, which had been anticipated by all 28 analysts polled by Reuters earlier in February.

The decision was ‘backed by uncertainty over the sustainability of the economic recovery and the expected fall of inflation in upcoming months,’ said Maja Goettig, chief economist at Bank BPH.

Analysts expect rates to stay flat in upcoming months, followed by two hikes in the second half of the year, bringing the main rate to 4 percent.

Analysts and investors will keep close tabs on comments on policy later today at an MPC conference, particularly since nine of the panel’s 10 members are new, starting six-year terms.

The central bank is also due to release key points from its new inflation projection at 1500 GMT, predicting the inflation and growth path for the rest of 2010, 2011 and some of 2012.

‘We expect the GDP growth path to be higher than the previous forecasts, although it is difficult to say whether or by how much this will increase the inflation path. For the first time, projections for 2012 will be shown,’ said Maciej Reluga, chief economist at Bank Zachodni WBK.

‘The medium-term inflation path should determine the timing of interest rate hikes. We still believe that the first hike will take place in October.’