The Polish central bank’s rate-setting Monetary Policy Council left interest rates unchanged, keeping the reference rate at 6.75 percent.
The decision was expected despite the fact that inflation remains at a persistently high level. Even though the November inflation figure saw the first slight decline in the rate of inflation since February, most commentators agree that it is too soon to talk of inflation being tamed.
The December figure is expected to be lower than the 17.5 percent recorded for November, but most experts expect that in January and February, inflation could rise again and may top 20 percent in February. Poland’s central bank (NBP) also expects inflation to rise in the first quarter but envisages it falling significantly in the remaining months of the year.
The central bank’s decision to keep the lending rate unchanged will stabilize the cost of credit.
Back in the fall, the market had expected that the central bank would keep rising interest rates, but this has not materialized. In effect, monthly mortgage repayments are likely to fall for borrowers. The government hopes this will help limit the downturn in the housing market.
In an election year, this is welcome news for the ruling conservative Law and Justice (PiS) party.