Polish interest rates will probably stay at a record low beyond mid-2014 even if faster economic growth leads to a pickup in inflation, central banker Anna Zielinska-Glebocka said.
Third-quarter data on gross domestic product and economic forecasts, updated monthly for policy makers, don’t show any risk to the bank’s inflation projections, set at 1.7 percent for next year and 1.9 percent for 2015, Zielinska-Glebocka said in a telephone interview Dec. 7.
“There’s a high probability that rates will stay unchanged longer” than through the first half of 2014, Zielinska-Glebocka said. “Next year could see economic growth of 3 percent, which would be a significant improvement. If that means slightly higher inflation, I’d prefer to enjoy the stronger economy rather than worry about price growth.”
The Narodowy Bank Polski in Warsaw cut its benchmark seven-day rate by 2.25 percentage points between November 2012 and July 2013 to help the economy rebound from its slowest growth in more than a decade. The central bank pledged to keep the rate at 2.5 percent at least for the next six months, reiterating that stance after policy makers left borrowing costs unchanged on Dec. 4 for a fifth month.
Polish GDP, unadjusted for seasonal effects, rose 1.9 percent in the third quarter from a year earlier, after a 0.8 percent gain the previous quarter.
Domestic demand grew half a percentage point in the third quarter, with consumer spending gaining 1 percent and investments rising 0.6 percent, according to the Central Statistical Office. The data show that record-low borrowing costs have yet to boost consumer confidence and revive private investments, Zielinska-Glebocka said.
“Growth has been driven by net exports, but now the key will be boosting private investment and consumer spending to ensure we have a sustained recovery in domestic demand,” Zielinska-Glebocka said.
The pace of economic growth will double next year from the government’s forecast of 1.5 percent for 2013, helped by a reviving German economy, which buys more than a quarter of Polish exports, she said. The Bundesbank on Dec. 6 raised its 2014 growth forecast for Europe’s largest economy to 1.7 percent from 1.5 percent.
“The upward revision is very positive news because better conditions in Germany could give an extra impetus to growth in Poland,” Zielinska-Glebocka said.