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Polish central bank maintains interest rates

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Polish central bank maintains interest rates

Poland's central bank decided to maintain its key rates amid a surge in consumer price inflation and the fastest rate of quarterly economic expansion in almost six years.

The monetary policy council of Narodowy Bank Polski said it is keeping the reference rate at 1.50%, the lombard rate at 2.50%, the deposit rate at 0.50% and the rediscount rate at 1.75%, each on an annual basis. The central bank also announced it will reduce the required reserves rate to 0.5% starting Jan. 1, 2018.

Inflation picked up unexpectedly in November, hitting the central bank's 2.5% target for the first time since 2012, Bloomberg News reported. Adam Glapinski, the central bank governor, previously said inflation would slow from September's level of 2.2% in the near term. Inflation is projected to increase between 1.6% and 2.9% in 2018, up from a previous forecast of 1.1% to 2.9%. At a press conference following the conclusion of the bank's October meeting, Glapinski reiterated that rates will not rise until the end of 2018.

On the macroeconomic front, revised figures showed the Polish economy growing 4.9% from a year ago, the fastest pace in almost six years. Unemployment is at a record low, and wages are rising at their fastest pace in several years.