POLL-Polish central bank seen keeping rates on hold

Credit: REUTERS/KACPER PEMPEL

Polish central bank unanimously expected to hold main rate at 5.75%

Disinflation slows markedly in November

reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=PLINTR%3DECI poll data

WARSAW, Dec 4 (Reuters) - The National Bank of Poland (NBP) will hold its main interest rate at 5.75% on Wednesday, according to all analysts polled by Reuters, extending a pause in easing to two months.

The December rate-setting meeting is the second since Poland's ruling Law and Justice (PiS) party lost its majority in the Oct. 15 parliamentary election, putting a coalition of opposition parties on track to take power.

The Monetary Policy Council (MPC) cited earlier interest rate adjustments as well as uncertainty about a future course of fiscal and regulatory policies and their impact on inflation in their decision to keep rates unchanged in November.

Also in November, Governor Adam Glapinski said that it was hard to tell how long Poland's central bank would pause rate cuts citing increased uncertainty over the pace of disinflation in the coming quarters.

The NBP's second 'hold' decision in a row would come after it had cut the cost of credit by a total of 100 basis points in September and October, with a shock 75 basis-point reduction in September sending the zloty currency tumbling.

"The Council's reaction function clearly changed between the October and November meetings," mBank economists said in a note.

"Currently, the communication theme is the uncertainty related to the direction of fiscal policy and the expectation of the March (NBP inflation and GDP) projection. Until then the MPC's message will not change," they said, adding that they expected rates to remain paused for even longer.

According to Bank Millennium economists, the council's rhetoric has turned 'more hawkish' since the election.

"The Council is also probably waiting for the new government's decisions regarding protective measures in the area of electricity and food prices, as well as the prospects for fiscal policy, to crystallize," they wrote in a note.

Of the 28 economists polled by Reuters, all expected no change in interest rates in December.

Last week a flash reading showed that the pace of disinflation in Poland slowed markedly in November.

(Reporting by Karol Badohal; Editing by Toby Chopra)

((karl.badohal@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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