(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.
Poland maintained record-low borrowing costs as conflicting forces inside the central bank were unable to shift interest rates in either direction.
The benchmark was left at 1.5% on Wednesday, in line with the predictions of all 30 economists in a Bloomberg survey. That extends an unprecedented pause that began in 2015.
The move follows separate motions in recent months to lift and cut rates -- both of which were rejected by the Monetary Policy Council. Governor Adam Glapinski has repeatedly described the level of borrowing costs as optimal, saying they should only be changed under extreme circumstances that remain unlikely.
“Arguments for rate increases are disappearing at lightening speed,” Glapinski told reporters in Warsaw. “Rates will most likely stay unchanged until the end of my term” in 2022.
Other eastern European countries have been similarly reluctant to tinker with borrowing costs. Despite weakness in nearby Germany, the region’s economies continue to expand rapidly, making rate cuts unnecessary. Inflation, meanwhile, is slowing or is likely to do so in the coming months.
The Czech National Bank left rates unchanged last week while Romania is seen doing likewise on Thursday.
In Poland, a minority on the MPC frets that inflation is too high, and will accelerate further as the economy continues to expand at more than 4% a year and the government ramps up social spending before this month’s parliamentary election.
Meanwhile, doves advocate even looser monetary policy. They point to rate cuts and stimulus in the U.S. and the neighboring euro region as global growth dips. Inflation’s first deceleration since January bolstered their case this week.
“A global slowdown isn’t the right environment for monetary tightening,” MPC member Jerzy Kropiwnicki said in an interview last month.
The latest data support that stance. A gauge of Polish manufacturing stayed below the level that indicates expansion for an 11th month in September. New orders matched the worst rate of decline since the global financial crisis.
The central bank is growing more concerned about the economic-growth outlook and the MPC is “increasingly divided,” Santander Bank Polska said in a note. “We assume that in the coming quarters none of the extreme factions will win the majority and interest rates will remain unchanged at least until the end of 2020.”
(Updates with governor in fourth paragraph, analyst in last.)
--With assistance from Barbara Sladkowska.
To contact the reporters on this story: Dorota Bartyzel in Warsaw at firstname.lastname@example.org;Adrian Krajewski in Warsaw at email@example.com
To contact the editors responsible for this story: Andrea Dudik at firstname.lastname@example.org, Andrew Langley, Wojciech Moskwa
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.