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Poland keeps interest rates unchanged

Poland's central bank left interest rates unchanged amid expectations for a lower core inflation trajectory and lower headline inflation.

Narodowy Bank Polski maintained the reference rate at 1.50% and lombard rate at 2.50%. The deposit rate was left unchanged at 0.50%, and the rediscount rate will remain at 1.75%.

"We expect the [Monetary Policy Committee] to maintain stable rates both in 2018 and 2019," said Jakub Rybacki, an economist at ING Research. "Given supportive economic conditions and the still-distant prospect of an ECB interest rate hike, committee members are likely to extend the guidance into 2020 in the second half of 2018."

Rybacki expects the central bank to revise its forecasts for CPI and GDP growth downward when it publishes new forecasts in July. Average CPI is expected to be at 1.6% year over year in 2018, well below the central bank's March projection of 2.1%, Rybacki said. Disappointing investment growth in Poland and weakening economic sentiment in the eurozone should result in a downward revision to GDP growth in 2019 and 2020, Rybacki added.