Poland's central bank chief says further rate cuts possible in Q1

WARSAW: Poland's central bank could make further cuts in interest rates during the first quarter of next year, the bank's president said on Twitter, giving a view that differed from widespread expectations that rates would remain unchanged in 2021.

Poland's key interest rate has been at a record low of 0.1% since the central bank cut the cost of borrowing three times by a cumulative 140 basis points during the first wave of the pandemic.

"The current level of interest rates is appropriate and best suits the current situation," Adam Glapinski said late on Tuesday on the official Twitter account of the National Bank of Poland (NBP).

"However, in the first quarter of next year, further rate cuts are possible," he added. "We are conducting appropriate analyses of the possible circumstances and potential effects of such a reduction at the NBP."

Most economists had expected stable rates until the end of 2021 at least.

The central bank has frequently indicated in press statements that it was concerned about the strength of Poland's currency, the zloty, which it thinks could hamper the pace of economic recovery from the COVID-19 pandemic.

On Dec. 18, a source close to the bank said it intervened to weaken the zloty.

On Tuesday afternoon, the zloty weakened more than 1%, causing speculation of a further intervention. Reuters was unable to confirm if the bank had intervened.