No rate of change

The National Bank of Poland's Monetary Policy Council (RPP) kept its benchmark interest rate steady at four percent last week, deciding against a cut for the first time since January. Many analysts believe this could signal the end of the bank's year-long easing cycle that has seen 250 basis points sliced off the cost of borrowing since March last year.

The move was widely expected. Analysts had predicted that a dropping złoty, higher interest rates in other parts of the globe, and a strengthening economy would leave little room for yet another rate cut. Markets saw little reaction to the announcement.

"The decision has been widely expected, this is no surprise," said Katarzyna Zajdel-Kurowska, chief economist at Citibank unit Bank Handlowy in Warsaw. "The main reason for keeping rates stable is the unclear future of fiscal policy and also the weakening of the złoty."

Investors expect one more quarter-point cut this year, possibly at the end of April, but some analysts say it could come later.

"Despite low inflation the RPP might put further cuts on hold if we have an unstable political scene and foreign-exchange market," said Zajdel-Kurowska. (Reuters)