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By Alan Charlish
WARSAW, July 31 (Reuters) - Poland’s central bank is unlikely to raise the cost of borrowing in the near future, according to two rate-setters contacted by Reuters, after data released on Wednesday showed inflation continuing to accelerate.
The country’s stance is shared by other central banks in the region, who have adopted a wait-and-see policy despite high inflation and economic growth, with loose global monetary policy having eased pressure on them to act.
A sharp rise in food prices helped to propel Poland’s July flash CPI rate to 2.9%, exceeding analyst estimates but remaining within the central bank’s target range of 2.5% plus or minus one percentage point.
“Inflation is slightly higher than what the July projection assumes. It does not yet mean that there is a radical change in our position,” central banker Rafal Sura told Reuters.
“We expect that at the beginning of next year inflation may even go above 3%, but it will still be within the inflation target range in force in Poland, and what is most important is that this inflation jump will not be of a lasting nature.”
The Polish central bank’s inflation report published earlier in July forecast that CPI will be 2% in 2019, 2.9% in 2020 and 2.6% in 2021.
The report said that strong demand pressure in the Polish economy will reach its peak in 2020, while the impact of African Swine Fever in China on meat prices will also fade after 2019.
Central Europe’s largest economy has kept its benchmark interest rate at a record low of 1.5% since March 2015 and central bank governor Adam Glapinski has repeatedly said that this situation is likely to continue until the end of the current Monetary Policy Council term in 2022.
However, rate-setter Kamil Zubelewicz said he thought a rate increase would be justified.
“Inflation is already noticeably high. To reduce price growth in the longer-term, interest rates should be raised,” he told Reuters. “I am afraid, however, that the council will not decide on such a move.”
Polish central banker Eugeniusz Gatnar was quoted by state-run news agency PAP as saying that Poland’s central bank may have to react if inflation keeps accelerating.
The Czech central bank meets on Thursday, with rate-setters expected to leave the cost of borrowing unchanged at 2%.
The National Bank of Hungary (NBH) left interest rates unchanged and affirmed its accommodative stance earlier in July.
Reporting by Alan Charlish Editing by David Goodman