Next move in Polish interest rates likely to be down

The Polish central bank’s decision to leave interest rates on hold comes as little surprise given the recent signs of a domestic slowdown and lower demand from abroad. With inflation set to ease further in the coming months, we think the Bank’s next move will be to lower rates, most likely starting in early 2012. We have pencilled in 50bps of cuts, taking the reference rate to a below-consensus 4%.

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