March 12, 2018 / 4:48 PM / 11 days ago

UPDATE 1-Polish central bank sees higher growth, lower inflation in 2018

* Bank cuts 2018 inflation forecast to 2.1 percent vs 2.3

* Cites strong zloty

* Economist says forecast fits into bank’s dovish rhetoric

* Bank raises GDP growth forecast to 4.2 percent vs 3.6 (Adds background and comments)

WARSAW, March 12 (Reuters) - Poland’s central bank cut its 2018 forecast for inflation on Monday while raising its prediction for economic growth, feeding into expectations that the country’s first interest rate rise in years is still several quarters away.

Citing the impact of a strong zloty, which has lowered prices of imported goods, the bank said it expected inflation of 2.1 percent this year, down from a November forecast of 2.3 percent.

That would leave it further below the 2.5 percent midpoint of the bank’s target range, which allows a fluctuation of one percentage point in either direction.

Central Bank Governor Adam Glapinski said on Wednesday he saw no reason to raise rates until the end of 2020, much later than he had said previously.

Those comments coincided with broader forecasts from the bank that detailed the range in which it expected inflation to lie in the years 2018-2020.

The bank has held benchmark rates at a record low of 1.50 percent since March 2015.

“The inflation projection fits into the dovish rhetoric of the (bank’s) Monetary Policy Council,” ING Bank Slaski said in a note. “We expect the MPC to raise rates only in 2019.”

In a new set of precise mid-term forecasts, the central bank said inflation would rise to 2.7 percent in 2019 and 3.0 percent in 2020.

It saw economic growth at 4.2 percent for this year, up from 3.6 percent previously, and also raised its 2019 forecast to 3.8 percent from 3.3 percent.

The zloty eased on Monday. By 1642 GMT it traded at 4.2060 against the euro, down about 0.3 percent.

Economic growth has been boosted by the influx of more than a million workers from Ukraine, which has also helped keep wage pressures in check.

The benign inflation outlook allied to robust economic growth echoes trends evident in some neighbouring countries.

Czech inflation was lower than expected in February, and European Central Bank Governor Mario Draghi said on Thursday that measures of underlying inflation in the euro zone remained subdued. (Reporting by Marcin Goclowski and Marcin Goettig Writing by Marcin Goettig; editing by John Stonestreet)

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