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Polish central bank sees above target inflation until at least 2025
Published Nov 09, 2022 17:32
Updated Nov 09, 2022 18:46
© Reuters. FILE PHOTO: A logo of the Polish Central Bank (NBP) is seen on their building in Warsaw, Poland, September 8, 2022. REUTERS/Kacper Pempel/File Photo
By Anna Koper
WARSAW (Reuters) - Inflation in Poland will only return to a level within or close to the central bank's target range in 2025, it said on Wednesday after it left its main interest rate on hold amid worries about slowing growth.
The bank kept its main interest rate steady at 6.75%. All of the bank's other interest rates remained unchanged.
Policymakers are facing a dual threat from slowing growth and soaring price growth, and economists had been split on whether the central bank would move again or stay put on rates.
"The weakening of the global economic conditions will also hamper GDP growth in Poland," the National Bank of Poland (NBP) said in a statement.
"Under such circumstances, the hitherto significant monetary policy tightening by NBP will support a decline in inflation in Poland towards the NBP inflation target."
Of 21 analysts polled by Reuters, 11 expected the main rate to rise by 25 basis points. Eight expected no change and two predicted a 50 basis point hike.
The National Bank of Poland's decision came a day after the Romanian central bank slowed the pace of its tightening, raising its benchmark interest rate by 50 basis points.
INFLATION
According to a flash estimate from the statistics office, inflation in Poland was 17.9% in October, the highest level in more than a quarter of a century and well above the central bank's target range of 1.5%-3.5%.
According to the bank's latest economic forecasts, a return to this level may only happen in 2025 at the earliest, when it forecasts price growth in a range of 2.1%-4.9%.
"Given strength and persistence of the current shocks that remain beyond the impact of domestic monetary policy, in the short-term inflation will remain high, and its return to the NBP inflation target will be gradual," the bank said.
The bank expects gross domestic product growth to slow in the coming quarter, seeing it in a range of -0.3% to 1.6% in 2023.
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