Polish industrial output fell more than economists expected in March, adding to arguments for the central bank to keep cutting interest rates.
Production dropped 2.9 percent from a year earlier, after decreasing 2.1 percent in February, the Central Statistical Office in Warsaw said today. The median estimate of 32 economists in a Bloomberg survey was for a 2.2 percent contraction. Output rose 9.2 percent from the previous month.
The Polish central bank left its benchmark seven-day rate unchanged at 3.25 percent for the first time in five months on April 10, as policy makers predicted record-low borrowing costs will reinvigorate the European Union’s largest eastern economy. While the bank projects a “gradual” recovery, a contraction in manufacturing deepened last month while retail sales fell in February and unemployment rose to a six-month high.
“A weak output print would nicely fit into the overall inflationary picture and may add to the pressure on the MPC to ease,” said Gabor Ambrus, a London-based economist at 4Cast Ltd., wrote in an e-mail yesterday. “The odds of further easing are growing.”
The zloty traded at 4.1154 percent against the euro before the release at 1:49 p.m. in Warsaw.
Poland’s central bank has delivered five rate cuts since November in a bid to stave off the country’s deepest slowdown in 12 years. Inflation slowed to 1 percent in March, the second month the rate undershot the central bank’s minimum tolerance level of 1.5 percent.
While the central bank’s March staff projections call for domestic demand to recover, doubling economic growth to 2.6 percent next year, European Central Bank President Mario Draghi said this month that risks remain on the downside for the euro area, where Poland sends 52 percent of its exports.
Producer prices fell 0.6 percent in last month from a year earlier, the statistics office said today in a separate report. That compared with a median estimate for a 0.4 percent decline in a Bloomberg survey of 25 economists. Producer prices dropped 0.2 percent from February.
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