NEWS

31^st July 2006 - Polish interest rates likely to remain on hold till end of 2007

Inflation is set to remain within target range, according to Monetary Policy Member Miroslaw Pietrewicz.

"If nothing exceptional happens like a supply shock, then we can expect that there will be no need to change interest rates to at least the end of 2007," Pietrewicz said, "as current rates are well suited to our economic growth needs." According to Pietrewicz, the latest projection from the central bank in Poland did not bring any significant changes to the view on inflation. "We can still look to the future with optimism, as the projection does not forecast exceeding the inflation target within the monetary policy horizon," Pietrewicz said. According to the latest inflation projection published Thursday, inflation in Poland will approach the target of 2.5% in Q1 2007, will hold just below it for the whole 2007 and will exceed the target in Q1 2008. "The projection is quite realistic when it says about inflation reaching 2.9-3.0% at end-2008," Pietrewicz said. "That's not a threat to the economy and would not require any extraordinary measures." Pietrewicz called the forecast for 1.5% year-end inflation "realistic", but warned that a prolonged drought could cause inflation to grow even more, although the EU common market could soften most of the blow of any upward price pressure. "But within the EU we have a chance for price effects to be softened, and, hence, no significant food price changes should take place. Still, inflation at year-end could be a little higher than the projection showed and may be a little over 1.5%," he said.

« back