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Wednesday, August 27, 2008

Poland's Central Bank Leaves Rate Unchanged

Poland's central bank left its benchmark interest rate unchanged for a second month as it assesses whether eight increases in the past 16 months have been enough to keep inflation within the limits it requires. The Narodowy Bank Polski kept its seven-day reference rate unchanged at 6 percent this week, although it did stress that further monetary tightening may be needed to bring inflation down to the target.

Slowing industrial output and retail sales indicate economic growth is itself slowing, and the bank takes the view that this, and the recent decline in global oil prices should reduce pressure on inflation after consumer prices rose at a rate of 4.8 percent in July, the highest level in eight years.

The bank said today that recent data showed the economy was gradually slowing while wage growth still remained strong. The central bank expect the inflation rate to stay above their 1.5-3.5 percent target range in the coming months, and indeed they have now been struggling for some 10 months get the rate down to their 2.5 percent target midpoint.

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