Poland holds rate, says next move to depend on data

    Poland's central bank maintained its reference rate at 2.50 percent and said "decisions in the coming months will depend on the incoming information," changing its guidance from June when it said rates would be kept unchanged until the end of the third quarter.
    The National Bank of Poland (NBP), which cut rates by 225 basis points from November 2012 through July 2013, also said inflation in coming months will remain very low and may temporarily drop below zero but the economic recovery and an improvement in the labour market should support a gradual increase in inflation toward the bank's target in the forecast horizon.
    This assessment was based on the NBP's latest forecast which sees a 50 percent chance of inflation between minus 0.1 percent and plus 0.4 percent in 2014, down from the previous projection in March 0.8 to 1.4 percent.
    Next year inflation inflation is forecast to range from 0.5 to 2.1 percent, down from the March forecast of 1.0 to 2.6 percent, and in 2016 inflation is seen from 1.3 percent to 3.1 percent compared with 1.6 percent to 3.3 percent.
    Inflation in May fell to 0.2 percent from 0.3 percent in April, well below the NBP's target of 2.5 percent, plus/minus one percentage point.

     Poland's economy is forecast to expand between 3.2 percent and 4.1 percent this year, up from its March forecast of 2.9 percent to 4.2 percent.  In 2015 Gross Domestic Product is forecast to grow by 2.6 percent to 4.5 percent, down from the March forecast of 2.7-4.8 percent while growth in 2016 is forecast at 2.3-4.5 percent compared with 2.3-4.8 percent previously forecast.
    Poland's GDP expanded by 1.1 percent in the first quarter of this year from the previous quarter for annual growth of 3.4 percent, up from 2.7 percent.
    It was the first meeting by the central bank's Monetary Policy Council since the bank's governor, Marek Belka, became embroiled in a scandal involving taped conversations.
    In the recordings Belka was heard using expletives about fellow MPC members and discussing a deal involving the central bank supporting the government with bond purchases in the event of significant financial instability. Belka was also heard telling the interior minister that such bond purchases would be conditional on a change in the finance minister.

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