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WARSAW May 17 Poland's central bank may keep
interest rates at their current record lows until the end of
2018 because inflation is expected to stabilise below the bank's
target, the head of the bank reiterated on Wednesday.
Speaking after the bank's rate-setting panel kept the key
rate at 1.50 percent for the 26th consecutive month, central
bank Governor Adam Glapinski said he was fine with the zloty's
current exchange rate despite its recent gains.
"In my opinion, even by the end of 2018 there may not be a
need for an interest rate hike if inflation is at a level at
which it is forecast," he told a news conference, adding rates
would not be raised this year for sure.
Glapinski said the central bank currently expects inflation
to remain at about 2 percent for a "longer" period of time.
The central bank has an inflation target of 2.5 percent,
give or take one percentage point.
Consumer prices ended more than two years of declines in
November last year and price growth hit 2.2 percent in February,
pushing the inflation-adjusted interest rate into negative
territory for the first time in five years. Inflation then
slowed to 2.0 percent in March and April.
Poland's $490 billion economy grew by an annual 4 percent in
the first quarter, the fastest pace in over a year and ahead of
analysts' expectations, confirming a rebound in the European
Union's largest eastern member.
The acceleration was probably driven by a pick-up in
investment and gains in consumption that were supported by
record-low unemployment and new child benefit payments
introduced last year, analysts have said.
"I would be surprised if this year's GDP growth did not
reach 4 percent," Glapinski said, adding there were no
imbalances, bubbles or other threats present in the economy.
"And we have a moderate growth rate of wages."
Nevertheless, Glapinski said the rate-setting Monetary
Policy Council's was carefully observing the labour market when
assessing if there was a potential need to change its current
wait-and-see policy stance.
The MPC's last interest rate move was a
half-percentage-point cut in March 2015. Analysts polled by
Reuters expect the bank will keep rates stable until a
25-basis-point increase in the second quarter of 2018
Speaking about the zloty, Glapinski said he was fine with
the current exchange rate, adding that it facilitated economic
The Polish currency has gained about 7 percent versus the
euro since early December and traded at 4.1899 per euro by 1526
($1 = 3.7604 zlotys)
(Reporting by Pawel Sobczak and Marcin Goettig; Additional
reporting by Bartosz Chmielewski; Writing by Marcin Goettig;
Editing by Larry King)