Poland Ends Current Round of Easing; Shifts to 'Wait and See'
WARSAW--Poland's central bank has finished its latest monetary easing campaign with a 0.5 percentage point rate cut and has shifted to a "wait-and-see" approach to policy, central bank Governor Marek Belka said Wednesday.
Adding to market confusion after the deeper-than-expected rate cut, however, the governor said a deterioration in the economy that diverges significantly from central bank forecasts could lead to further easing.
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"March's cut 'dots the i' in the easing cycle and now we are in wait-and-see mode," Mr. Belka told a press conference. "But we are not definitely shutting the door on more rate cuts."
The 10-strong rate-setting panel cut Poland's benchmark interest rate to a record low of 3.25% earlier Wednesday, after it began cutting rates in November in a cycle that has totaled 1.5 percentage points, a scale the bank called considerable.
Analysts had expected a more moderate 0.25 percentage-point cut in the cost of credit.
The European Union's largest emerging economy slowed in 2012 due to a debt crisis crippling its main trading partner, the euro zone, but also because of rising domestic unemployment and falling public and private investment.
The central bank Wednesday also lowered its forecasts of Poland's consumer price inflation and growth. It now expects the Polish economy to grow in the range of 0.6%-2.0% in 2013 and 1.4%-3.7% in 2014, compared with its previous forecasts of 0.5%-2.5% for 2013 and 1.1%-3.5% for 2014. It expects the economy to grow 1.9%-4.4% in 2015.
Consumer price inflation is expected to slow to a range of 1.3%-1.9% in 2013 and 0.8%-2.4% in 2014, compared with the bank's earlier forecasts of 1.8%-3.1% in 2013 and 0.7%-2.4% in 2014. In 2015, inflation is expected to range from 0.7% to 2.4%.
Poland's annual consumer price inflation rate eased to 1.7% in January from 2.4% in December, while economic growth slowed to 1.1% in the last three months of 2012 from 1.4% in the third quarter.
March 06, 2013 11:28 ET (16:28 GMT)
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