UPDATE 1-Polish central bank's Glapinski does not expect rate rise in 2018

By Kitco News / June 07, 2017 / www.kitco.com / Article Link

(Adds quotes from central bank governor, details)

By Pawel Florkiewicz and Marcin Goettig

WARSAW, June 7 (Reuters) - Poland's central bank is likely to keep interest rates at record lows until the end of next year because inflation is expected to stabilise, its governor reiterated on Wednesday.

Adam Glapinski told a news conference that the central bank was not concerned about the zloty's recent strong gains after its rate-setting panel kept the key rate at 1.50 percent for the 27th consecutive month.

"There is no need to send signals to markets that the horizon of interest rates hikes is nearing. Personally I would be surprised if we raised rates in 2018," he said.

Analysts polled by Reuters have postponed over the last two months the expected beginning of monetary tightening in Poland, partly due to Glapinski's persistently dovish rhetoric and a stabilisation in inflation.

In April, analysts expected the next hike to take place in the first quarter of 2018, but now see it coming in the third quarter of next year. The central bank said on Wednesday that it expects inflation to remain moderate in the coming quarters.

"The risk of inflation running persistently above the target in the medium term is limited," the bank said.

Polish consumer prices ended more than two years of declines in November last year, and annual inflation hit 2.2 percent in February. Inflation then stabilised at 2 percent in March, April and slowed to 1.9 percent in May.

The central bank's last interest rate move was a half-percentage-point cut in March 2015.

Speaking about the zloty, Glapinski said the bank was not concerned about its recent strengthening, adding the gains translated into tighter monetary conditions.

"We are carefully watching," Glapinski said. "One can see that the zloty has strongly appreciated recently ...., but this does not raise any particular concern on our side."

The Polish currency has gained about 7 percent versus the euro since early December.


(Additional reporting by Pawel Sobczak and Bartosz Chmielewski; writing by Marcin Goettig; editing by Alexander Smith)

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