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Poland central bank holds key rate steady

In Hungary

Photo by Mateusz Szymanski/Shutterstock.com

Poland’s central bank maintained its key interest rate at a record low of 1.5% on Wednesday, as widely expected, numerous outlets including Polish Radio and Reuters reported.

The National Bank of Polandʼs Warsaw headquarters. Photo by Mateusz Szymanski/Shutterstock.com

Polish inflation will likely slow and stay around target after peaking in the first quarter of 2020, the National Bank of Poland (NBP) said, playing down fears that planned hikes in the minimum wage could fuel stronger price growth.

Ahead of a parliamentary election on Oct. 13, the leader of Poland’s ruling nationalist Law and Justice (PiS) party, Jarosław Kaczyński, said on Saturday the minimum wage would be almost doubled to PLN 4,000 (approximately EUR 921) by 2023.

The NBPʼs Monetary Policy Council decided to keep the key reference rate on hold at its record low 1.5%. The previous change in the reference rate was a half-basis point reduction in March 2015.

The bank targets CPI of 2.5% plus or minus one percentage point. Polish CPI hit its highest point in July since 2012, coming in at 2.9%, before decelerating slightly to 2.8% in August, fueling discontent among the public.

Consumer price inflation will peak at 3.5% in the first quarter of 2020 before slowing to 2.8% in the following quarter, central bank Governor Adam Glapiński said on Wednesday. The Lombard rate was retained at 2.5% and the deposit rate at 0.5%. The rediscount rate was left unchanged at 1.75%. 

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