Poland Unexpectedly Halts Rate Hikes After Slowdown Hits Economy




  • In Business
  • 2022-10-05 14:31:44Z
  • By Bloomberg
 

(Bloomberg) -- The Polish central bank unexpectedly paused its yearlong cycle of interest-rate increases after signs of an impending economic slowdown shifted its focus away from surging inflation.

Most Read from Bloomberg

  • Musk Revives $44 Billion Twitter Bid, Aiming to Avoid Trial

  • Loretta Lynn, Coal Miner's Daughter And Country Queen, Dies

  • Elon Musk Sets Off Uproar in Ukraine by Tweeting His 'Peace' Plan

  • The Best Bar in the World Is Hidden Behind a Barcelona Pastrami Shop

  • Mar-a-Lago Documents Included Pardons, Emails, Legal Bills

Policy makers left the benchmark rate at 6.75%, defying forecasts from 27 of 30 economists surveyed by Bloomberg. Central bank Governor Adam Glapinski signaled last month that the pause could come as early as October. Yet the latest inflation reading -- the highest in 26 years -- raised expectations for more tightening.

The central bank had lifted rates at each of its previous 11 meetings in an attempt to clamp down on surging prices. The campaign has sparked anger among mortgage borrowers and concerns that the economy may slip into a recession, a risk that Glapinski has repeatedly dismissed as unlikely.

"A further slowdown of GDP growth is forecast for the coming quarters, while the economic outlook is subject to significant uncertainty," the central bank said in a statement on Wednesday. The economic data so far suggest growth slowed further in the third quarter, it added.

Glapinski will hold a news conference to explain the decision at 3 p.m. on Thursday.

The zloty slumped as much as 0.7% after the announcement. It traded at 4.8290 per euro at 4:10 p.m. in Warsaw. The currency plummeted to an almost seven-month low last week amid a global sell-off, adding to inflation pressures by making imports more expensive.

The central bank repeated in its statement that it's ready to intervene on the currency market to smooth volatility.

"The Monetary Policy Council is clearly hoping that the slowdown will curb inflation and will give more time for inflation to return to 2.5%" target, ING economists said on Twitter. "It's a risky strategy."

Bank Pekao SA economists, who predicted that the rates will stay on hold on Wednesday, said the central bank wasn't done tightening the policy. A new set of forecasts in November "will show new inflation risks and will be an opportunity for the Monetary Policy Council to revise its strategy," they said.

Most Read from Bloomberg Businessweek

  • Millions in Cryptocurrency Vanished as Agents Watched Helplessly

  • Pfizer Needs to Prove It's Ready to Move On From Covid-19

  • Maine Lobster Union Points the Way for Organizing Gig Economy Workers

  • Big Pharma Is Chasing a $55 Billion Prize of Safer Blood Thinners

  • Facebook Is the Only Game in Town for Digital Political Ads

©2022 Bloomberg L.P.

COMMENTS

More Related News

Analysis-China central bank to offer limited, targeted growth support, no bazooka
Analysis-China central bank to offer limited, targeted growth support, no bazooka

China's $17 trillion economy is headed for one of its worst showings this year in almost half a century, but its central bank has limited options in its...

TSMC Plans to Make More Advanced Chips in US at Urging of Apple
TSMC Plans to Make More Advanced Chips in US at Urging of Apple

(Bloomberg) -- Taiwan Semiconductor Manufacturing Co. will offer advanced 4-nanometer chips when its new $12 billion plant in Arizona opens in 2024, an...

Stocks Rally on China Covid, Powell; Dollar Slides: Markets Wrap
Stocks Rally on China Covid, Powell; Dollar Slides: Markets Wrap

(Bloomberg) -- Stocks extended gains in Asia after China appeared to soften is Covid stance and Federal Reserve Chair Jerome Powell signaled a slowdown in...

Chinese Stocks Add to Historic Rally as Reopening Signs Grow
Chinese Stocks Add to Historic Rally as Reopening Signs Grow

(Bloomberg) -- Chinese stocks extended gains into the new month amid fresh signs that the nation is moving away from Covid Zero that's wreaked havoc on...

GoTo Plumbs New Low After Early Backers
GoTo Plumbs New Low After Early Backers' Lock-Up Expires

(Bloomberg) -- Shares of GoTo Group plunged to yet another record low after a lock-up on its major shareholders' stakes expired, freeing early backers to...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business