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Poland’s central bank has opted to keep interest rates on hold, as expected. The reference rate remains 1.5 per cent.

A press conference later will shed more light on the decision.

US bank BBH said earlier:

Inflation pressures are rising and could force the [Polish central bank] to hike in 2017, before its plan to start tightening in 2018. The economy remains robust, while CPI is expected to pick up from 0.8% y/y in December to 1.7% in January. If so, this would be the highest rate since January 2013.

Meanwhile, ING thinks the zloty is getting too strong:

We expect the NBP to highlight rate hikes this year are unlikely, awaiting persistent growth recovery. Annual GDP suggested that 4Q16 growth picked up on unsustainable inventories build-up, while investments remained lacklustre (suggesting GDP may slow in 1Q17). The MPC shows little sensitivity for real rates turning negative, underlining external sources of inflation. Detailed CPI structure revealed that core inflation inched up recently almost exclusively on regulation-driven components. Market prices a rate hike this year at just below 50%, hence we expect a moderate (zloty-negative) disappointment.

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