Inflation Will Remain Low

Złoty Worth More?

Złoty Worth More?

According to members of the Polish Monetary Policy Council (RPP), inflation, will stay at its current low level during the next few quarters. The minutes of the RPP January meeting indicate that it is because of a further drop in the price of industrial production, as well as low inflation rates in countries that are Poland’s main trading partners. Additionally, the National Bank of Poland (NBP) stresses that the positive situation on international markets mitigates any risk of a significant increase in energy and food prices. However, some members of the RPP emphasise that low inflation also results partly from temporary factors, independent of national monetary policy, which NBP should take into consideration. NBP estimated in January 2013 that CPI inflation will be 1.7% in 2014, and 1.9% in 2015. Although low, these rates are slightly higher than those assumed earlier, in July 2013. NBP also announced that according to some RPP members, the high unemployment rate inhibits the pressures of cost and demand. Finally, the RPP decided that interest rates should remain unchanged for at least the first half of 2014. The rates are as follows: the reference rate is 2.50%, exchange rate is 4% and deposit rate is 1%. The RPP also stated that a more accurate evaluation of medium-term inflation and economic growth perspectives will be possible after the next NBP projection, which will take place in March 2014.

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