Poland's Central Bank Holds Rates

Poland's central bank left its benchmark interest rate unchanged today, as policy makers seek signs the economy is slowing and argue that the zloty is strong enough to tame inflation for the time being. Rate setters held the seven-day reference rate at 5.75 percent.



The 10-member Monetary Policy Council have lifted borrowing costs seven times in the past year to counter the effect of rising wages and strong consumption. Policy makers' efforts to bring the inflation rate, at 4.1 percent in March, back to within its 2.5 percent goal may be aided by slowing retail sales and industrial output, but we need to wait and see I feel.




The zloty traded at 3.453 per euro after the decision, little changed from 3.449 in the morning and up from yesterday's close of 3.453. Yield on the government's two-year bond fell to 6.169 percent from 6.178 percent before the decision.




Average corporate wages rose an annual 10.2 percent in March, below the central bank's forecast, while the 15.7 percent annual advance in retail sales was the slowest in three months. These are still strong numbers however. Industrial output on the other hand rose an unexpectedly weak 0.9 percent. This may well be an impact of the rising zloty on the relative prices of home grown output.The zloty has gained 4.2 percent against the euro and 10.3 percent against the dollar this year so far, raising concerns that it may hurt exports and affect growth.

Poland Inflation March 2008

Polish inflation unexpectedly slowed in March, raising expectations that the central bank may put interest rate increases on hold for the time being. The inflation rate declined to 4.1 percent from 4.2 percent, the Central Statistical Office reported today in Warsaw. Consumer prices gained a monthly 0.4 percent, the same as in February.



The inflation rate fell for the first time in seven months. The central bank-led Monetary Policy Council has increased the benchmark seven-day reference rate seven times in the past year to 5.75 percent, trying to bring the inflation rate down near its 2.5 percent target.

Poland Gross Wages March 2008

Wages in Poland's corporate sector rose 10.2% on the year in March, below forecastsand down from 12.8% in February, data released Tuesday by the Central Statistical Office. On the month, March average wages rose 3.7%, following February's 2.1% monthly rise. The figures are preliminary and cover Polish companies with more than nine employees.




The wage figures, coupled with lower-than-expected March annual inflation of 4.1%, may delay the possibility of a quarter-point interest-rate hike by Poland's central bank at its meeting at the end of April.

The average gross wage was 3,144.41 zlotys ($1,458.65) in March, up from PLN3,032.70 in February. Total employment at firms with more than nine employees amounted to 5.38 million in March, up 5.8% on the year. That annual rise was slightly below the consensus analysts' average forecast of a 5.9% rise, but suggests Poland's economy is still adding jobs at a pretty fast pace.