Poland to cut interest rates?
PR dla Zagranicy
Analysts at Citi Handlowy, a Warsaw-based bank, have predicted in a report that 2015 will see further cuts in the National Bank’s reference interest rates.
Photo: flickr/cc/money pictures
Poland’s Monetary Policy Council (RPP), a body of the National Bank of Poland, sharply cut the reference rate to a record low of 2 percent in October last year, following worries over deflation and weakening growth.
Although since then the RPP has refrained from further cutting rates, Citi Handlowy experts believe that deepening deflation, driven by falling global oil prices, may put pressure on the RPP to do so in the near future.
The authors of the report write, “We have doubts whether the RPP will be able to ignore growing pressure linked to the long period of deflation […] This pressure could grow after January, following further falls in CPI.”
According to Citi Handlowy the falling fuel prices may mean that Poland’s deflation period could last until the summer months, potentially resulting in overall year-on-year deflation for 2015.
The bank expects the reference rate to fall to 1.5 percent, 0.5 percentage points lower than presently.
The report concluded that the combination of a fall in interest rates, a weaker zloty and cheaper fuel may boost economic growth in 2015 and 2016 to exceed current expectations. (sl/jb)