Polish rates to stay flat?

The debate continues on Poland's interest rates with members of the Monetary Policy Council unable to agree whether rates should be cut at the upcoming meeting. Stanisław Owsiak, a member of MPC, told Reuters in an interview that inflation is due to fall to the central bank's 2.5 percent target, from the current 4.2 percent, by end of 2009 indicating that the economy will continue to slow, therefore, making this the right time to make a quick decision and cut rates.

"The prospects of economic slowdown for Poland in 2009 and 2010 are obvious. Because of the delayed impact of monetary policy decisions, this is a reason to make a quick decision at the next sitting," Owsiak told Reuters.

However,  Halina Wasilewska-Trenkner said that MPC is likely to keep rates unchanged for the next five months. "Personally, I think the most likely scenario is leaving interest rates unchanged for the next five months. The remaining two months of this year and the first quarter of 2009," she told Reuters. She added that inflation needs to be suppressed in order to fulfill euro zone entry criteria.

Poland plans to adopt the euro in 2012 and has laid out a roadmap to euro adoption, a goal that has been coined as ambitious. (AO)

Source: Reuters