By Patryk Wasilewski And Martin M. Sobczyk
WARSAW--Poland's central bank slashed its main interest rate by
50 basis points to 1.50%, the lowest on record, in response to
persistent declines of consumer prices despite healthy economic
growth.
Most analysts--17 out of 20 polled by The Wall Street
Journal--had predicted a smaller cut of 25 basis points, with two
expecting a deeper, 50 basis point cut and one saying rates would
remain unchanged.
The central bank governor, Marek Belka, had flagged a possible
cut in early February, when he said enough factors supported a
lowering of interest rates.
The rate cut is the latest in a series of easing measures by
central banks across Europe, following the European Central Bank's
decision in late January to launch a program of quantitative
easing, under which it will buy more than EUR1 trillion ($1.12
trillion) of mostly government bonds by September 2016.
Poland's consumer prices have been depressed for months, mainly
because of the falling prices of food and oil in international
markets, with consumer price inflation well into negative territory
at -1.3% in annual terms in January. The central bank's target is
an inflation rate of 2.5%.
The cut on Wednesday came despite a series of data suggesting
the Polish economy is growing at a sustained pace. In 2014, it grew
3.3% and the central bank expects the rate of growth to remain
above 3% over the next two years.
A central banker crucial to some recent rate decisions, Elzbieta
Chojna-Duch, said in February the fall in consumer prices stems
from factors beyond the Polish central bank's control and "as a
principle" she was against moving rates further down. Still, an
interest rate disparity between Poland and the eurozone, which has
its rates near zero, is a factor that needs consideration, she also
said at the time.
The U.S. dollar has appreciated around 6% against the zloty so
far this year and around 16% over the last six months. After the
rate decision, the zloty rose to 3.7584, its highest level against
the dollar since late January. At 1355 GMT the zloty was trading at
3.7496 to the dollar.
Write to Patryk Wasilewski at patryk.wasilewski@wsj.com