April 5, 2018 / 2:49 PM / a year ago

Polish rate hikes seen postponed until fourth-quarter 2019: poll

WARSAW (Reuters) - Poland is likely to keep interest rates on hold at their current all-time low until a hike in the last quarter of 2019, a Reuters poll found on Thursday, reflecting a surprising slowdown in inflation and dovish comments by the central bank governor.

All 16 analysts polled on Apr. 4 and Apr. 5 expected the bank’s rate-setting Monetary Policy Council (MPC) to keep the benchmark rate at 1.50 percent on Wednesday next week.

The median forecast was for no change until the fourth quarter of 2019 - three quarters later than in last month’s poll - when the bank is seen raising the rate by 25 basis points.

The shift reflects comments from the governor, who said after the last rate meeting in March that he saw no reasons to raise rates until the end of 2020, given current forecasts.

Additionally, inflation in March unexpectedly slowed to 1.3 percent year-on-year, further below the bank’s 2.5 percent target despite record low unemployment and relatively fast wage growth.

“First, inflation in the last two months surprised to the downside so it will likely approach the target more slowly,” said Piotr Bielski, head of economic research at BZ WBK bank, explaining his forecasts.

“Second, the MPC and particularly Governor Glapinski have sent clear signals that they will not rush with rate hikes,” he said.

BZ WBK now expects a hike in the last quarter of 2019 compared to the first quarter of 2019 last month.

Poland had experienced more than two years of deflation until late 2016. The central bank has kept rates unchanged since a half-percentage-point cut in March 2015.

Reporting by Marcin Goettig; Editing by Andrew Roche

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