Polish central bank head says rates most likely to remain stable

WARSAW: Polish interest rates are most likely to remain unchanged in coming months, Central Bank Governor Adam Glapinski said on Friday, adding that both raising and lowering borrowing costs could not be ruled out if conditions required such moves.

Glapinski took markets by surprise in December when he said that rate cuts might be possible in the first quarter, but subsequently he's said stable rates are most likely, with a radical economic downturn needed to bring cuts into the picture.

"The most likely scenario is a complete lack of any change in rates in the coming months. However, we do not rule out a rate cut," Glapinski told a press conference broadcast on the central bank website. "In no way can we rule out raising rates if that turned out to be necessary."

Poland's benchmark interest rate has been at a record low 0.1% since rate-setters cut it three times by a cumulative 140 basis points during the first wave of the COVID-19 pandemic in the spring of 2020.

Glapinski said inflation is not a threat at the moment, with projections showing it in line with the central bank's target of 2.5%, plus or minus one percentage point.

Glapinski also said further interventions in the currency market to weaken the zloty were possible, but that the central bank had no fixed target for the exchange rate.

"The aim of the interventions started in December was to limit the pressure for zloty appreciation ... the aim of these actions is not to maintain the exchange rate at some concrete level," he said.

The Polish zloty, which this week broke through 4.50 to the euro, which economists have said could trigger an intervention, but gained during Glapinski's press conference and was 0.29% stronger on the day at 4.488 at 1515 GMT.