The Narodowy Bank Polski's Monetary Policy Council held the benchmark 7-day interest rate unchanged at 4.50%. The Bank said: "In the opinion of the Council, in the medium term inflation will be curbed by gradually decelerating domestic demand amidst fiscal tightening, including reduced public investment spending, and interest rate increases implemented in the first half of 2011, as well as the expected global economic slowdown. The impact of the situation in the global financial markets on zloty exchange rate together with a possible rise in commodity prices continues to be an upside risk to domestic price developments."
The Bank also kept the following interest rates unchanged: the rediscount rate at 4.75%, the Lombard rate at 6.00%, and the deposit rate at 3.00%. The Bank last raised the interest rate by 25 basis points to 4.50% in June last year, and held the interest rate unchanged at its previous meeting.
Poland reported annual headline inflation of 4.8% in November last year, compared to 4.3% in August, 4.1% in July, with previous readings of 4.2% in June, 5% in May, 4.5% in April, 4.3% in March, and just higher than the Bank's official inflation target of 2.5% +/- 1%.
The IMF recently reduced its forecast for Poland's 2011 economic growth rate to 3.8% from 4% previously. The Polish Zloty (PLN) has weakened by about 19% against the US dollar so far this year; the USDPLN exchange rate last traded around 3.52.
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