By Karol Badohal
WARSAW (Reuters) - Polish interest rates may remain on hold for the rest of the year amid "very high uncertainty" over the outlook for inflation, central bank Governor Adam Glapinski said on Thursday.
His comments helped lift the zloty currency by as much as 0.8% against the euro on the day before pairing gains.
"Until the end of this year, if nothing unexpected happens, there will not be a majority in favour of a motion to cut rates," Glapinski told a news conference.
In contrast, the central bank of neighbouring Czech Republic delivered a bigger-than-expected 50 basis-point rate cut on Thursday, sending the Czech crown tumbling to its weakest level since May 2022.
Poland's main interest rate has been on hold at 5.75% since October.
The National Bank of Poland (NBP) has taken a cautious approach due to uncertainty over whether the government will extend or modify policies designed to soften the blow on households from inflation.
A law that scrapped value-added tax on food expires at the end of the first quarter, while another designed to lower energy prices is currently set to remain in force until the end of the second quarter.
Glapinski said this meant inflation was likely to rise in the second half of the year but it was hard to say by how much.
However, he reiterated that price growth would slow in the first quarter to reach the NBP's target range of 2.5% plus or minus one percentage point.
"The outlook for inflation is subject to very high uncertainty... the scale of this increase is unpredictable," he said.
Glapinski also said that the NBP had decided to increase the share of gold in its reserves to 20%.