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The conflicting forces within Poland’s central bank aren’t strong enough to shift interest rates in either direction.
Separate motions to lift and cut borrowing costs were rejected during Monetary Policy Council meetings last quarter, and there’s still no majority for a move away from the current record low.
All 30 economists in a Bloomberg survey predict the benchmark will be kept at 1.5% on Wednesday -- extending a record pause that began in 2015.
“Stable rates continue to be the baseline scenario,” said Ernest Pytlarczyk, chief economist at MBank SA in Warsaw, who sees “a very comfortable situation” for central bankers as inflation first breaches than retreats back into the target range next year.
That’s certainly the view of Governor Adam Glapinski, who’s repeatedly described the level of borrowing costs as optimal. They should only be changed under extreme circumstances that remain unlikely, he says.
Region Conclusions
Other eastern European countries have reached a similar conclusion. Despite weakness in nearby Germany, the region’s economies continue to expand rapidly, making rate cuts unnecessary. Inflation, meanwhile, is slowing or is likely to do so in the coming months.
The Czech National Bank left rates unchanged last week while Romania is seen doing likewise on Thursday.
In Poland, a minority on the MPC frets that inflation is too high, and will accelerate further as the economy continues to expand at more than 4% a year and the government ramps up social spending before this month’s parliamentary election.
Meanwhile, doves advocate even looser monetary policy. They point to rate cuts and stimulus in the U.S. and the neighboring euro region as global growth dips. Inflation’s first deceleration since January bolstered their case this week.
“A global slowdown isn’t the right environment for monetary tightening,” MPC member Jerzy Kropiwnicki said in an interview last month.
The latest data support that stance. A gauge of Polish manufacturing stayed below the level that indicates expansion for an 11th month in September. New orders matched the worst rate of decline since the global financial crisis.
“The problems in European manufacturing are beginning to spill over into the local economy,” analysts at PKO Bank Polski said in a note.