Polish central bank lowers inflation forecasts a touch, holds rates
By Anna Koper
WARSAW (Reuters) -The National Bank of Poland (NBP) on Wednesday slightly lowered its inflation forecasts for the coming three years, reinforcing expectations that interest rates will remain at current levels after it left them unchanged for a sixth consecutive month.
Economists polled by Reuters expect the main interest rate to remain at 6.75% until the end of the year. With no major changes to the inflation outlook those expectations also look unlikely to change.
"We are de facto in wait and see mode and the next move will take place at the end of the year at the earliest," Pekao analysts said on Twitter. "The new NBP projection has changed practically nothing in the Council's view of the world."
Inflation, which was running at an annual rate of 17.2% in January, could fall to the central bank's target range of 1.5%-3.5% or a level close to that in 2025, the forecast showed.
For this year it forecast an inflation rate of 10.2%-13.5% and 3.9%-7.5% for 2024, marginally lower than in its last set of forecasts released in November.
The NBP slightly raised its forecasts for gross domestic product (GDP) growth to between minus 0.1% and plus 1.8% in 2023 and 1.1%–3.1% in 2024.
The bank stuck to its view that a global slowdown combined with falling commodity prices would help curb price growth in Poland.
While the NBP has not officially ended the tightening cycle it began in 2021, the impact of the war in Ukraine on growth means analysts' focus has shifted to when borrowing costs could start falling.
Other central banks in the region have also kept rates steady in recent months. In February, the National Bank of Hungary (NBH) held the European Union's highest benchmark at 13%, defying government pressure to cut borrowing costs amid a sharp economic slowdown.
(Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz, Anna Wlodarczak-Semczuk, Karol Badohal, Editing by Christina Fincher, Kirsten Donovan)