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Poland Interest Rates Remain Unchanged

Poland's central bank kept its key interest rate unchanged at a record low on Wednesday, as expected.

The Monetary Policy Council decided to keep the key reference rate at a record low 1.50 percent, the National Bank of Poland said.

The previous change in the reference rate was a half-basis point reduction in March 2015.

The lombard rate was kept at 2.50 percent and the deposit rate at 0.50 percent. The rediscount rate was left unchanged at 1.75 percent.

NBP policymakers are set to hold their post-decision press conference later on Wednesday.

Policymakers are likely to adopt a dovish stance amid weak inflationary pressures, Capital Economics economist Liam Carson said.

Headline inflation hit a two-year low of 1.1 percent in December, far short of the NBP's 2.5 percent target, driven by weaker food and fuel price growth. Core inflation was also soft.

"Indeed, the headline rate is unlikely to rise above target at any point this year," Carson said.

Further, the export-led manufacturing sector is also set to face a slowdown ahead.

"Although the next move in interest rates is still likely to be up, the MPC will probably use its post-meeting communications to stress that rates will be kept on hold over the next few quarters," Carson said.

"All told, we think that the National Bank will wait until 2020 before it starts to tighten monetary policy."

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