Bloomberg News

Polish Inflation Slows Below Forecast, Remains Above Target

October 13, 2011

(Updates with economist’s comment in third paragraph, zloty, forward-rate agreements in seventh.)

Oct. 13 (Bloomberg) -- Poland’s inflation rate fell more than forecast in September while staying above the central bank’s target for a 12th month, suggesting the central bank may wait until next year before cutting borrowing costs as the economy weakens.

Consumer prices rose 3.9 percent from a year ago compared with 4.3 percent in August, the Warsaw-based Central Statistical Office said today. That’s below the 4.1 percent median forecast in a Bloomberg survey of 32 economists. Prices rose 0.1 percent from the previous month.

“This confirms the easing of price pressure we’re seeing, including sales promotions by retailers that suggest weaker consumer demand ahead,” said Ernest Pytlarczyk, head of financial markets research at BRE Bank in Warsaw.

The Narodowy Bank Polski, which left its benchmark seven- day rate at 4.5 percent for a third meeting Oct. 5, is betting four quarter-point increases in the first half of the year and a weaker economy will bring inflation toward its 2.5 percent target in the medium term. The International Monetary Fund cut Poland’s 2011 growth forecast to 3.8 percent from 4 percent Sept. 20 as demand for its exports dwindles among western European nations struggling with a sovereign-debt crisis.

“Inflation isn’t slowing enough to start talking about an interest-rate cut,” Zyta Gilowska, a member of the central bank’s Monetary Policy Council, said in an Oct. 11 interview in Warsaw. “I still think expectations for one are definitely premature.”

BRE’s Pytlarczyk said today’s data increase the likelihood that the policy makers will begin rate cuts in the first quarter.

The zloty extended losses after the data, trading at 4.3119 per euro at 2:28 p.m., down 0.5 percent on the day. Investors raised their expectation for interest-rate cuts following the release. Three-month forward rate agreements fell 1 basis points to 4.695, or 6 basis points below the three-month Warsaw Interbank Offered Rate of 4.745 percent.

The zloty had declined 7.4 percent in the third quarter, the third-biggest fall among emerging-market currencies tracked by Bloomberg.

--Editors: Andrew Langley, David McQuaid

To contact the reporter on this story: Dorota Bartyzel in Warsaw at

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

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