National Bank of Poland leaves reference rate unchanged at 4¾%

By Tali David

Minneapolis, Sept. 5 - National Bank of Poland's Monetary Policy Council decided to leave its interest rates unchanged at 4¾% at a meeting held on Tuesday and Wednesday, according to an announcement from the bank.

The Lombard rate was also left at 6¼%, the deposit rate at 3¼% and the rediscount rate at 5%.

The council said that global economic activity remains low. Recession in the euro area has been accompanied by moderate growth in the United States.

At the same time, in emerging economies, economic growth decreased in the second quarter of 2012. Subdued global economic growth supported easing of inflation in many countries.

Recently, the sentiment in the international financial markets has improved somewhat, which supported prices of some financial assets and encouraged capital inflows to emerging markets.

The council said that in the second quarter, employment growth came to a halt and the unemployment rate was higher than a year ago, mainly due to a further increase in the labor force participation.

At the same time, wage growth in the economy, including the corporate sector, decelerated.

After a temporary rise in June, consumer price inflation fell to 4% in July though it remained above the bank's inflation target of 2.5%. Inflation net of food and energy prices did not change while households' inflation expectations stayed elevated.

The council said it forecasts that inflation will decrease gradually over the coming months, as the statistical base effect wanes amidst slowing demand in the economy.

Should the incoming data confirm further weakening of economic conditions, and should the risk of increase in inflationary pressure be limited, the council said it will consider adjustment of monetary policy.

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