Poland's central bank unexpectedly reduced its interest rates by a quarter-basis point on Wednesday, taking the benchmark rate to a record low, amid sluggish growth and slowing inflation.
The Monetary Policy Council of the National Bank of Poland lowered the reference rate to 3 percent from 3.25 percent. Economists had expected the bank to leave the rate unchanged. The previous change in interest rates was a 50 basis point cut in March.
In March, a majority of the council had expected the rate cut to ease monetary conditions and support higher economic growth, and consequently, help to bring inflation close to the target in the medium term.
In April, the council decided to leave rates unchanged citing 'ambiguous signs' of a possible economic recovery in the subsequent quarters, the minutes of the meeting revealed.
However, the recent economic indicators have failed to give any signs of a recovery in the near term. Inflation fell to 1 percent in March, which is well below the central bank's target range of 1.5 percent to 3.5 percent. The core figure eased to 1 percent in March, the lowest level in five-and-half years.
The country's manufacturing sector contracted at the fastest pace in nearly four years in April, owing to sharper declines in output and new orders, data released by Markit Economics and HSBC Bank showed last week. Poland's economic growth weakened notably in the fourth quarter of 2012.
Elsewhere in Central Europe, Hungary and the Czech Republic also have record low interest rates.
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