National Bank of Poland stresses weak economic forecast, keeps reference rate unchanged at 3½%

By Susanna Moon

Chicago, Nov. 20 - The Monetary Council of the National Bank of Poland stressed the relatively small improvement in the E.U. economy and the weak forecast for the region in deciding to maintain the 3½% reference rate at its meeting on Oct. 28, according to minutes of that meeting.

Council members also pointed out that much of the improved economic climate in the United States and in China was rooted in their respective stimulus packages. They said the prospect for removing those measures kept uncertain the sustainability of global economic recovery.

They also noted questions about the private consumption recovery in the United States amid the deteriorating labor market.

Other council members said the recovery in emerging economies, Asian countries in particular, may be important to an economic revival worldwide.

As for the outlook for economic growth in Poland, some members said the economy had already entered the phase of recovery, although some of them emphasized that this recovery may prove relatively slow.

The council said on Oct. 28 that it left its reference rate at 3½% as it noted that inflation decreased to 3.4% in September, above the inflation target of 2½% but still below the upper limit for deviations of 3½%, indicating the decreased demand has not fully offset the increase of administered prices and the depreciation of the zloty exchange rate.

The council forecast that inflation should remain at an elevated level in the coming months, but over the medium term the council sees the probabilities of inflation running either above or below the target level to be balanced.

The reference rate remains at 3½%, the Lombard rate at 5%, the deposit rate at 2% and the rediscount rate at 3¾%.

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