Poland on hold, repeats steady rate at least until end-Q3

    Poland's central bank maintained its reference rate at 2.50 percent, as widely expected, and reiterated that "interest rates should be kept unchanged for a longer period of time, i.e. at least until the end of the third quarter of 2014."
    Last month the National Bank of Poland (NBP) pushed back the time frame for any rate change until the end of the third quarter of this year from its previous guidance of maintaining rates at least until the end of the second quarter.
    "In the opinion of the Council, gradual economic recovery is likely to continue in the coming quarters, however, inflationary pressures will remain subdued," said the central bank which cut its rate by a total of 225 basis points from November 2012 through July 2013.
    Poland's headline inflation rate rose to 0.7 percent in February from January's 0.5 percent, but the NBP said it remained "markedly below" the bank's 2.5 percent target, plus/minus one percentage point.
    It added that core inflation was also at a low level, producer prices declined further and inflation expectations are low.
    In its latest monetary policy report, the central bank forecast inflation in 2014 of 0.8 percent to 1.4 percent and 2015 inflation of 1.0 to 2.6 percent. The International Monetary Fund (IMF) this week forecast 2014 inflation of 1.5 percent and 2.4 percent in 2015 compared with 2013's 0.9 percent.

     The latest economic data show that Poland's economic recovery is continuing, with the central bank saying growth in industrial output and retail sales has accelerated in the first months and in February construction and assembly output also rose.
    The recovery is gradually being transmitted to the labour market, though the unemployment rate remains at an elevated level which restricts wage growth. Poland's unemployment rate eased to 13.6 percent in February, the second month of declining joblessness.
    Poland's Gross Domestic Product rose by 0.6 percent in fourth quarter from third quarter for annual growth of 2.7 percent, up from 1.9 percent in third quarter and the third quarter of accelerating growth.
    The NBP forecasts growth this year of 2.9 to 4.2 percent, up from 2013's 1.6 percent, and 2.7 to 4.8 percent in 2015. The IMF projects 2014 growth of 3.1 percent and 3.3 percent in 2015.

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