Polish central bank leaves main interest rate unchanged

By Anna Wlodarczak-Semczuk

WARSAW (Reuters) -Poland’s central bank held its main interest rate at 6.75% on Wednesday, as expected, and said it believes weakening gross domestic product growth, together with already implemented rate hikes, would help gradually curb inflation.

“The council assesses that the weakening of the external economic conditions, together with a decline in commodity prices, will continue to curb global inflation, which will contribute to lower price growth in Poland,” it said in a statement.

“The decline in domestic inflation will be supported by a weakening of GDP growth, including consumption, amid a significant decrease in credit growth.”

After soaring to levels unseen since the 1990s, inflation in emerging Europe’s largest economy eased in March to 16.2% compared with 18.4% in February.

The central bank’s Monetary Policy Council now hopes that the rate hikes it has already implemented will see price growth return to single digits before the end of the year.

Central bank governor Adam Glapinski has previously said that he expects inflation to fall to single digits around the beginning of September, paving the way for interest rate cuts in the fourth quarter.

“The decrease in inflation would be faster if supported by an appreciation of the zloty exchange rate, which, in the Council’s assessment, would be consistent with the fundamentals of the Polish economy,” the council added.

All of the analysts in a Reuters poll had forecast rates would remain unchanged, a trend economists expect to continue until the end of the year.

Investors are now waiting for more insight into the central bank’s thinking when Glapinski holds a news conference on Thursday.

Other central banks in the region have also opted to leave rates unchanged in recent months as they balance risks to growth from the war in Ukraine against high inflation.

On Tuesday, Romania’s central bank kept its benchmark interest rate at 7.00%.

(Reporting by Alan Charlish, Pawel Florkiewicz, Anna Wlodarczak-Semczuk; Editing by Kirsten Donovan and Alison Williams)