NBP Retains Interest Rate of 2.0% Despite Decelerated Growth
- National Bank of Poland Holds Rates Steady at 2.0% for second month
- While GDP slows to 3.3%, unemployment decreases to 11.3%
- USDPLN fails to break resistance at 3.400
Despite a deceleration in growth, the polish economy in its entirety remains stable enough to limit the risk of inflation remaining below the mid-term target of 2.5%. In accordance, the National Bank of Poland held the key reference rate at 2.0%.
In their review, the Monetary Council noted that sluggish imports and exports negatively impacted third quarter GDP, causing it to decelerate to 3.3% from 3.5% in Q2. Additionally retail sales were down 0.1% in October and remained weak in November (2.3%), coming in below the expected 2.9 percent. Evident that demand and cost pressures were absent, CPI in October fell from -0.3 to -0.6%. However in balancing out these ill effects unemployment in the tenth month fell to 11.3% after registering 11.5% in September. In addition to unemployment successively declining in every month of the year, monthly wages in October were up 4.3% over the previous year.
Global economic activity also displayed variation. While third quarter economic growth in the US remained fairly robust at 3.9%, Russia and China each observed a recent weakening, with China cutting their benchmark rate by 0.40 basis points. Similarly while increases in consumption and fixed capital formation kept third quarter UK GDP stable at 0.7%, effects from April’s VAT increase left Japan running an asset purchase program. Commodities have shared a similar fate this week with USoil declining and copper and gold recovering.
With a cautious but stable domestic and global outlook, the zloty held off the US dollar with the pair failing to break resistance at 3.400.
USDPLN Daily Chart
Chart Created by Walker England Using MarketScope2.0
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