MNI NBP WATCH: Cut Comes Despite Unchanged Core Inflation

The National Bank of Poland cut interest rates by 25 basis points on Wednesday despite unchanged headline core inflation, to leave the reference rate at 4.5%. (See MNI EM NBP WATCH: Cut, Or Wait Until Fresh Projections)

“Taking into account an improved inflation outlook for the coming period, in the Council’s assessment, it became justified to adjust the level of the NBP interest rates." the Monetary Policy Council said.

Uncertainty persists from the level of administered energy prices and inflation developments abroad, it said, while fiscal policy, consumption demand recovery and elevated wage growth remain risk factors for inflation.

Annual CPI inflation in September was flat 2.9%, while core inflation is also expected to remain close to the 3.2% level recorded the previous month, the NBP said in a statement, amid “still elevated” price growth.

Wage growth was also elevated despite a “slight decline,” and retail sales and industrial output rose in annual terms, but construction and assembly production decreased.

The NBP offered no interim macroeconomic projections, or deviate from its commitment to making decisions in accordance with incoming information regarding the prospects for inflation and economic activity.

Governor Adam Glapinski will give more detail in a press conference on Thursday.