Central European Daily

Yesterday´s meeting of the Polish central bank (NBP) brought no significant news; the bank left its key rate untouched at the all-time low (2.50%) as broadly expected and, at the following press conference, NBP president Belka just restated comments pronounced to media after the previous central bank meeting in March. From market perspective, probably the most interesting information delivered by Mr. Belka was a firm rejection of additional interest rate cuts. Mr. Belka said that – given the fact that the state of the economy had been gradually improving – it would be a policy mistake to cut rates further, even when inflation is projected (by both the NBP and us) to stay below the target till the end of 2015. Mr. Belka reiterated that NBP’s forward guidance envisaging interest rates stability until at least the end of the third quarter could be extended along with the release of a new inflation projection in July. In our opinion, the possibility not only comes true but a progressive extension of stable rates period has become NBP’s main strategy and policy tool for the following months and quarters.