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.

Poland's Central Bank Raises Interest Rates to 5.75%

Poland's central bank today raised its benchmark interest rate by a quarter of a percentage point to its highest level in three years in an attempt to stop inflation getting out of control. The Narodowy Bank Polski lifted the seven-day reference rate to 5.75 percent, the third consecutive increase and the seventh in the past 11 months.

The rate-setting Monetary Policy Council has so far failed in its bid to contain price growth after the inflation rate breached the upper end of its 1.5 percent to 3.5 percent target range in November and rose to a three-year high of 4.2 percent in February. Other statistics, including industrial output, retail sales and wages, have all boosted concern that inflation may well be set to accelerate further.

``The council sees inflation as more likely to remain above the target in the mid term and decided to raise key rates,'' the council said in a statement. ``The council will vigilantly observe wage growth and labor productivity. It will also monitor the exchange rate of the zloty and global economic trends.''

The zloty traded at 3.533 per euro at 3 p.m. in Warsaw, little changed from before the decision and down from 3.524 yesterday. Yield on the government's bond maturing in April 2012 was 6.139 percent, unchanged from just ahead of the announcement and up 3 basis points from yesterday.


The average corporate wage rose in February an annual 12.8 percent, the largest year on year monthly increase in almost eight years:




while industrial output growth, at 14.9 percent, was the highest in 14 months:



Todays retail sales data has also added to expectations that there may well now be further monetary policy tightening in the pipeline, since the statistics office reported that retail sales in February rose an annual 23.8 percent the highest in almost four years.



Poland's 625 billion euro economy expanded 6.5 percent last year, the fastest pace in a decade, and may have grown by about 6 percent in the first quarter of this year, according to recent estimates from Katarzyna Zajdel-Kurowska over at the Finance Ministry.

Polish Growth Forecast At 6 Percent in Q1 2008

Poland's economy may have grown about 6 percent in the first quarter of 2008, according to Deputy Finance Minister Katarzyna Zajdel-Kurowska in Warsaw today..

``Economic statistics for the first months confirm that Poland is resilient to the global economic slowdown,'' Zajdel- Kurowska she told a press conference in Warsaw today. The Polish economy expanded 6.1 percent in the fourth quarter of 2007.

Wage and employment growth are likely to boost the inflation rate and budget revenue, while the ministry doesn't expect this year's spending plan to be fully implemented, she said.




Poland's Monetary Policy Council has raised interest rates six times in the past 11 months on concern that wage growth, outpacing production, will increase labor costs and force companies to lift retail prices. The average corporate wage rose 12.8 percent last month, the fastest pace in eight years.



Zajdel- Kurowska forecast the average inflation rate would rise to at least 3.5 percent, above the government's forecast of 2.3 percent. The main threat to the inflation outlook stems from energy and food prices, as well as rising unit labor costs and potential zloty depreciation if the central bank should ever need to reduce interest rates.