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Poland Very Likely to Debate Rate Raise in May, Belka Says

April 13, 2012

Poland’s central bank will “almost certainly” vote on a rate-increase motion next month, Governor Marek Belka said, adding that it is “hard to say” whether policy makers will decide to increase borrowing costs.

Inflation (POCPIYOY) slowed to 3.9 percent in March from 4.3 percent the previous month, in line with the median estimate of 30 economists in a Bloomberg News survey the statistics office in Warsaw said today. The rate has exceeded the 3.5 percent upper limit of the central bank’s tolerance range since January 2011.

“March inflation data were neutral for the council, neither encouraging nor discouraging a rate increase,” Belka said, according to the state-owned PAP news service. “It is very likely that we will consider an interest-rate increase at the meeting next month.”

The Narodowy Bank Polski on April 4 kept the benchmark seven-day interest rate at 4.5 percent, the highest since January 2009. The Monetary Policy Council is “approaching the stage to seriously consider” raising borrowing costs, Belka said after the decision was announced. The Council will hold its next meeting May 8-9.

The zloty weakened after the inflation report at 2 p.m. before recovering to trade at 4.1807 per euro at 3:50 p.m. in Warsaw, down 0.4 percent on the day. The yield on the five-year bond maturing in October 2016 rose to 5.03 percent from 5.013 percent late yesterday.

‘No Impact’

“Inflation came close to the central bank’s expectations and should have no impact on the council’s rhetoric since prospects for inflation returning to the target are distant,” Wojciech Matysiak, an economist at Bank Pekao SA (PEO) in Warsaw, said in a note. “Data from the real economy will soon confirm that the economy is slowing, which will prevent the council from raising the rate.”

Gross domestic product rose 4.3 percent in the fourth quarter of 2011 from the year-earlier period, leading to expectations the full-year growth estimate of 4.3 percent may be revised higher, Belka said last month. Last week, he reiterated the economy may slow less than previously estimated this year, while the first-quarter economic expansion was “probably also around 4 percent.”

“Industrial output and retail sales data can have significant meaning for the council’s decision,” Belka said today, cited by PAP newswire. Poland is scheduled to release industrial output figures on April 19 and retail sales on April 25.

To contact the reporters on this story: Dorota Bartyzel in Warsaw

To contact the reporter on this story: Piotr Skolimowski in Warsaw at

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