Poland exchange traded funds have lagged behind other European markets but are receiving a helping hand from the government as the central bank pledges to keep rates at record lows to stimulate the economy.
The iShares MSCI Poland Capped ETF (NYSEArca: EPOL) declined 5.9% over the past month and the Market Vectors Poland ETF (NYSEArca: PLND) fell 6.2%. Over the past year, EPOL gained 2.6% and PLND was up 2.9%.
Narodowy Bank Polski, or the National Bank of Poland, left benchmark seven-day interest rates at 2.5% for a sixth month, citing “low” demand and cost pressures in Poland, Bloomberg reports.
The central bank’s decision comes off recent economic data that revealed Poland’s manufacturing sector unexpectedly slowed last month. Inflation, though, has slowed for a third month in November and hovers below the central bank’s target.
“Essentially, we’re where we were last month and I don’t see any reason to change our language,” Governor Marek Belka said. “Inflation is indeed low and will remain below the target over the forecast horizon.”
Poland’s economy expanded at a 1.9% annual pace in the third quarter, which is still below the average rate of 4.1% for the past decade.
Forward-rate agreements point to a quarter point hike in benchmark interest rates within 12 months. Piotr Lysienia, senior economist at Bank Pocztowy SA, anticipates the first increase to come between the third and fourth quarters.