Inflation hits a low
Rising oil and gas prices have taken their toll, with inflation coming in higher than expected in July. However, the figure is still quite low. In an interview with Radio PiN, Dariusz Filar, a member of the central bank's policy council, said:"From all we have seen up till now, the time is coming for consideration of whether to change the policy bias to neutral, away from easing, and not to think about further cuts."
Bond yields rose two to three basis points in response to his comments, which cast doubt on market expectations that the central bank will trim interest rates for the fifth time this year at its August policy meeting. Last month the bank cut its benchmark rate to an all-time low of 4.75 percent.
Annual inflation eased to 1.3 percent in July from 1.4 percent a month earlier, staying below the bottom of the central bank's 1.5-3.5 percent range around its 2.5 percent target. But the figure published last week exceeded market forecasts, suggesting price growth would return to the bank's range as soon as next month, Filar said.
"Inflation remained low because of food prices. But those prices fell less than the market had expected ... We know with a high dose of probability that in September inflation will rise significantly," he said.
Growing signs that the Polish economy is recovering after its soft patch in the first quarter have made financial markets scale back their rate-cut expectations, but most investors believed the benign inflation outlook left room for some moderate easing.
Several central bankers in the past have reinforced those expectations, voicing confidence that inflation would stay well below the bank's target this year and next. (Reuters)
Bond yields rose two to three basis points in response to his comments, which cast doubt on market expectations that the central bank will trim interest rates for the fifth time this year at its August policy meeting. Last month the bank cut its benchmark rate to an all-time low of 4.75 percent.
Annual inflation eased to 1.3 percent in July from 1.4 percent a month earlier, staying below the bottom of the central bank's 1.5-3.5 percent range around its 2.5 percent target. But the figure published last week exceeded market forecasts, suggesting price growth would return to the bank's range as soon as next month, Filar said.
"Inflation remained low because of food prices. But those prices fell less than the market had expected ... We know with a high dose of probability that in September inflation will rise significantly," he said.
Growing signs that the Polish economy is recovering after its soft patch in the first quarter have made financial markets scale back their rate-cut expectations, but most investors believed the benign inflation outlook left room for some moderate easing.
Several central bankers in the past have reinforced those expectations, voicing confidence that inflation would stay well below the bank's target this year and next. (Reuters)
