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The Central Bank of Poland did not change its basic interest rate

Poland's central bank left its key interest rate unchanged as concerns about supply chains and economic growth caused by the coronavirus outweighed fears of accelerating inflation, Bloomberg informed.
The institution's Monetary Policy Council has taken the decision to leave the rate at a record low of 1.5%, despite inflation hitting its highest level in eight months.

"The balance of risks shifted toward an even deeper economic slowdown due to the ongoing coronavirus outbreak,” said Ernest Pitlarczyk, chief economist at MBANK SA.

The 10-member Council, which rejected proposals to reduce and increase rates in recent months, has struggled to hold the level of inflation, which accelerated in January to 4.4%, Investor"

Central bankers will discuss the new economic forecasts made by the analytical department of the central bank. Inflation is expected to remain above target for longer and economic growth will slow to 3.5 percent or even less, Polish Central Bank Governor Adam Glapinski said. Forecasts will be revealed to the public in the coming week.

The country's gross domestic product growth slowed to 3.2% year-on-year in the fourth quarter and could slow further in 2020 as the coronavirus outbreak disrupts supply chains and limits consumption. However, a case of infected with the disease has not yet been confirmed in Poland.

“With a possible collapse caused by the disease, the country's economy could shrink in two straight quarters this year, reducing its annual economic growth rate in 2020 to 1 percent,” Credit Agricole SA analysts said.

“The pace of GDP growth will determine the actions of the central bank,” said Monica Kurtek, chief economist at Bank Pocztowy SA. “If it (GDP growth - BL) slows below 3%, then we might be talking about rate cuts,” she added.

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