Central bank holds off on rate hike

The Polish central bank's Monetary Policy Council (MPC) decided to leave interest rates unchanged as expected, but analysts expect another rate hike. The decision leaves rates at 6.0 percent.

The central bank decision comes after poor economic results for August, which indicated signs of an economic slowdown. Analysts predict that if September market results show an economic slowdown, then further rate tightening will be necessary and a rate hike is possible in October.

"I think weaker-than-expected retail sales and output data [for August] were the key factors for the council and so the decision to leave interest rates unchanged was obvious," said Marcin Mróz, chief economist at Fortis Bank.

Another factor weighing in on rate decisions is due to Prime Minister Donald Tusk's declaration on Poland entering the euro zone in 2011. Analysts believe another hike will be necessary to meet the Maastricht criteria.

Inflation in July and August stood at 4.8 percent, well above the central bank's 2.5 percent target.

Source: Reuters