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Polish central bank holds fire as CPI seen easing due to slowdown

By Anna Koper

WARSAW (Reuters) -Poland's central bank on Wednesday left its main interest rate unchanged at 6.75%, playing a waiting game in light of forecasts that inflation will peak in the first half of 2023 as the economy slows.

Price growth in emerging Europe's largest economy last year hit levels not seen for a quarter of a century, but central bankers have said they are waiting to assess the impact of policy tightening that has increased rates by a cumulative 665 basis points so far.

In a statement following the decision, the central bank repeated the view that an expected global economic slowdown would help curb inflation in Poland.

"Under such circumstances, the hitherto significant monetary policy tightening by NBP will support a decline in inflation in Poland towards the NBP inflation target," it said

Analysts polled by Reuters expect interest rates to remain on hold until the end of 2023.

"The position of Governor (Adam) Glapinski and the majority of the MPC clearly indicates a lack of willingness to further tighten monetary conditions," said Grzegorz Maliszewski, chief economist at Bank Millennium.

"All the more so as in the external environment there are signs of a stabilisation of inflationary tensions; for example, decreases in commodity prices."

Other central banks in the region have also opted to keep rates on hold because of concern over an economic slowdown.

The National Bank of Hungary (NBH) left its base rate unchanged at 13% in December, while the Czech National Bank (CNB) kept rates on hold for a fourth straight meeting while not giving up the option of further tightening.

(Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz, Anna Wlodarczak-Semczuk, Editing by David Goodman)