Bloomberg News

Polish Main Rate Should Rise to 5% This Year, PKO’s Bodys Says

April 17, 2012

Poland’s central bank should raise its benchmark interest rate by half a point to 5 percent as price growth remains “stubbornly high” and an economic slowdown is “relatively mild,” said PKO Bank Polski SA’s chief economist Radoslaw Bodys.

The Monetary Policy Council will increase the rate by a quarter-point at its May meeting “if monthly data doesn’t surprise” or in June, while the next rate increase will come after the second quarter, Bodys told a conference in Warsaw today.

The Narodowy Bank Polski on April 4 warned that it will consider raising interest rates as early as May if slowing growth fails to curb inflation, which has exceeded the 3.5 percent upper end of its tolerance range since January 2011. Policy makers the same day left the benchmark seven-day interest rate at 4.5 percent, keeping it unchanged at the highest since January 2009 for a 10th month.

Poland’s economy, the only one in the European Union to dodge a recession in 2009, expanded an estimated 4.3 percent last year, while monthly data suggests the first-quarter growth slowed to 3.5-4 percent, according to PKO Bank Polski, which forecast a full-year increase of 3 percent.

‘Some Misunderstanding’

“There is some misunderstanding in saying the council cannot impact inflation because it is mainly driven by commodities prices,” said Bodys, who sees the inflation rate below 3.5 percent in the fourth quarter. “It cannot influence a price of crude oil, but it can impact the price of oil in zloty as the increase would strengthen the zloty.”

Policy makers have indicated their decision on rates in May will hinge on economic data due this week, including production, wages and jobs growth. Anna Zielinska-Glebocka said in an April 14 interview that “over the next few days there should be enough for us to make a preliminary judgment on the pace and structure of economic growth.”

A day earlier, central bank Governor Marek Belka was cited by PAP newswire as saying the bank will “almost certainly” vote on a rate-increase motion next month.”

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

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

The Aging of Abercrombie & Fitch
blog comments powered by Disqus