The National Bank of Poland kept its interest rates steady with inflation likely to increase in coming months but the central bank added that it may adjust rates if the outlook for inflation changes.
The Polish central bank noted the weakening global economy and said this would contribute to falling commodity and energy prices and this would be "conducive to the decline in global inflation."
"The Council does not rule out the possibility of further monetary policy adjustment, should the outlook for inflation returning to the target deteriorate," the Polish central bank said in a statement following a two-day meeting of its monetary policy council.
It kept the key reference rate unchanged at 4.75 percent, as widely expected.
In April the Polish central bank surprised markets by raising rates by 25 basis points to 4.75 percent due to inflation exceeding the central bank's 2.5 percent target. In April consumer prices accelerated to an annual rate of 4.0 percent but in May inflation eased to 3.6 percent.
"In the opinion of the Council, in the coming months inflation is likely to increase temporarily and remain above the upper limit of deviations from the inflation target," the bank said, adding:
"However, in the medium- term, economic slowdown amidst fiscal tightening and interest rates increases implemented in 2011 and 2012 will be conducive to inflation returning to the target. This assessment is also supported by the July projection of inflation and GDP."
The bank's forecast called growth in 2013 to fall below its 2012 level and then accelerate in 2014. Inflation, after a temporary rise in the third quarter of this year, will gradually decline to be close to the bank's inflation target next year.
The bank also said that sentiment in international financial markets had stabilized in recent weeks, which had lead to a rise in most emerging market currencies, including the Polish zloty.
www.CentralBankNews.info
The Polish central bank noted the weakening global economy and said this would contribute to falling commodity and energy prices and this would be "conducive to the decline in global inflation."
"The Council does not rule out the possibility of further monetary policy adjustment, should the outlook for inflation returning to the target deteriorate," the Polish central bank said in a statement following a two-day meeting of its monetary policy council.
It kept the key reference rate unchanged at 4.75 percent, as widely expected.
In April the Polish central bank surprised markets by raising rates by 25 basis points to 4.75 percent due to inflation exceeding the central bank's 2.5 percent target. In April consumer prices accelerated to an annual rate of 4.0 percent but in May inflation eased to 3.6 percent.
"In the opinion of the Council, in the coming months inflation is likely to increase temporarily and remain above the upper limit of deviations from the inflation target," the bank said, adding:
"However, in the medium- term, economic slowdown amidst fiscal tightening and interest rates increases implemented in 2011 and 2012 will be conducive to inflation returning to the target. This assessment is also supported by the July projection of inflation and GDP."
The bank's forecast called growth in 2013 to fall below its 2012 level and then accelerate in 2014. Inflation, after a temporary rise in the third quarter of this year, will gradually decline to be close to the bank's inflation target next year.
The bank also said that sentiment in international financial markets had stabilized in recent weeks, which had lead to a rise in most emerging market currencies, including the Polish zloty.
www.CentralBankNews.info
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