NBP’s official interest rates likely be on hold through 2017

Poland’s economic growth has slowed a bit as he absorption of EU structural Fund is not optimal and therefore investment is decelerating. Hence, private consumption should be driving the nations consumption, thanks to continuous fiscal stimuli and decently rising wages. The Polish central bank’s official interest rates are likely to stay the same through 2017 even if inflation is expected to accelerate this year, according to KBC Market Research.

However, inflation is not expected to reach the central bank’s target rate of 2.5 percent. But market interest rates with longer maturities might be quite vulnerable in 2017, particularly if interest rates on important markets continue to rise.

Dollar market rates driven by likelihood of a rate hike by the Feb might keep the Polish zloty on the defensive, but the European Central Bank’s eased policy might offset such pressure. Furthermore, the country’s continuing upturn and the central bank’s conservative monetary policy are fundamentally positive for the zloty from the medium-term perspective.

“Of the Polish macroeconomic fundamentals that should not allow the zloty to weaken significantly, we should mention the very well developing balance of payments and growing FX reserves”, added KBC Research Market.