Bloomberg News

Polish Inflation Quickened in August First Month Since May

September 13, 2011

(Adds economist’s comment in fourth paragraph, zloty, swaps in fifth.)

Sept. 13 (Bloomberg) -- Poland’s inflation rate rose in August for the first time in three months, damping speculation the central bank may begin cutting interest rates as the European Union’s debt crisis hurts economic growth.

Consumer prices rose 4.3 percent from a year ago compared with 4.1 percent in July, the Warsaw-based Central Statistical Office reported today. Price growth exceeded the median forecast of 4.2 percent in a Bloomberg survey of 28 economists. Prices were unchanged on the month.

The Narodowy Bank Polski, which raised the benchmark seven- day rate by a total 1 percentage point to 4.5 percent between January and June from a record low, left borrowing costs unchanged for a second meeting this month.

“This is going to limit the chances of any rate cuts,” Piotr Lysienia, an economist at Bank BPH in Warsaw, said in an e-mail response to questions from Bloomberg. “It had looked as though inflation would slow until the end of 2011 and that policy makers would be free to focus more on economic growth.”

The zloty was unchanged after the data were released, trading at 4.3360 per euro at 2:13 p.m. in Warsaw, less than 0.1 percent stronger on the day. Poland’s two-year interest rate swaps, which investors use to fix borrowing costs in the future, rose 1 basis point to 4.6 percent.

‘Too Early’

“Interest rates should remain unchanged at least through the end of this year,” said Elzbieta Chojna-Duch, a member of the central bank’s Monetary Policy Council, in a Sept. 9 interview. The bank’s current price growth expectations mean “we shouldn’t ease monetary policy too early as inflation may accelerate again as of June 2012.”

Investors began betting in August the central bank is more likely to cut than raise interest rates in the coming months. Six-month forward rate agreements are trading 20 basis points below the three-month Warsaw Interbank Offered Rate, a drop from 84 basis points above that rate on April 13.

--With assistance from Barbara Sladkowska, Maciej Martewicz and Monika Rozlal in Warsaw. Editors: David McQuaid, James Gomez


To contact the reporter on this story: Katya Andrusz in Warsaw at

To contact the editor responsible for this story: Balazs Penz at

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