WARSAW: The Polish central bank's projections for inflation and gross domestic product (GDP) support keeping interest rates at their current level, rate-setter Eryk Lon wrote in an article published on Tuesday.

Poland's central bank published its November inflation report on Tuesday, with projections showing a smaller contraction in GDP in 2020 than it forecast in July, but higher inflation over the period 2020-2022.

The central bank now forecasts that gross domestic product (GDP) will fall by 3.5% in 2020, compared to the 5.4% drop forecast in July. However, the November projection shows CPI at a higher level in 2020-2022 than forecast in July - at 3.4% in 2020, 2.6% in 2021 and 2.7% in 2022.

"In light of macroeconomic conditions, I believe that the most optimal would be for the Polish central bank to maintain interest rates at the current level until the end of the current term of the Monetary Policy Council (MPC)," Lon said in his article published on wgospodarce.pl website.

The MPC term ends in 2022.

Lon, the most dovish member of the MPC, also said that negative interest rates should be treated as a possibility, but not a certainty.

Poland slashed the cost of borrowing three times by a cumulative 140 basis points during the first wave of the coronavirus pandemic. The central bank's key interest rate is at a record low of 0.1%.