Polish inflation forecast improving

Polish inflation has made an improvement in earlier forecasts and probably eased to 4.4 percent in September marking an ease on interest rate hikes, however, plans to join euro in 2012 reduce the chances of actual cuts.

The finance ministry on Wednesday forecast that last month's price growth likely stood at 4.4 percent, down from 4.8 percent in August. Meanwhile, Monetary Policy Council member Andrzej Slawiński said that inflation may ease below four percent at the end of the year, showing an improvement in earlier inflation patterns.

"If there is no significant rise in regulated prices, inflation may ease below four percent at year-end," Slawinski told TVN CNBC. Deputy Finance Minister Katarzyna Zajdel-Kurowska also agrees adding that there's no need to change the inflation forecast.

Meanwhile, Marian Noga, member of MPC said that Poland will need one more interest rate hike despite the ministry's inflation forecast. "This [the ministry forecast] is welcome information but the economy requires one more quick rate hike… Our goal is to bring inflation back to target and this requires one more hike as soon as possible," Noga told Reuters.

Central bank has targeted inflation of 2.5 percent, however, in August inflation stood at 4.8 percent. In order for Poland to adopt the euro, it needs to meet the inflation requirement, a target which according to central bank Governor Sławomir Skrzypek may require a restrictive monetary policy.

"The project of taking Poland into the ERM 2 mechanism means that our monetary policy may be relatively more restrictive than it was before," Slawiński said. (AO)

Source: Reuters