Polish Central Bank Cuts Rate by Half-Point to Record Low
Bloomberg - Mar 04, 2015
Poland’s central bank cut borrowing costs more than estimated in what economists described as a last attempt to nudge the economy away from a deflationary spiral.
The Monetary Policy Council lowered its benchmark seven-day reference rate by 50 basis points to 1.5 percent, a record low. Eleven of 36 economists in a Bloomberg survey predicted the half-point cut, 23 forecast a 25 basis-point reduction, while two predicted no change.
Rate setters had hesitated to join their global peers in monetary easing since they last cut borrowing costs by 50 basis points in October, in part because falling prices didn’t stall Poland’s economy. Opposition to easing may have been overcome by the central bank’s latest staff projections, which probably showed deflation persisting two or even three quarters longer than previously forecast, according to Grzegorz Ogonek, a Warsaw-based economist at ING Bank Slaski SA.
“We’re assuming this is the end,†Ogonek said by phone. “The Monetary Policy Council evidently decided to go for a deep cut before the economy reverses direction.’
