BUDAPEST, May 18 (Reuters) - Poland's central bank is ready to act against the current oil price-driven inflation shock but will take its time to assess the outlook, especially as the country is in better shape than it was during the last inflation shock, its governor said on Monday.
The National Bank of Poland (NBP) this month kept its main interest rate at 3.75%, in line with analysts' forecasts, due to uncertainty over the war in Iran and its impact on central Europe's largest economy.
After the decision, Governor Adam Glapinski said the likelihood of monetary policy tightening had increased, adding that rates could rise if inflation exceeds the 3.5% upper limit of the bank's target range and forecasts indicate it will remain elevated.
However, at a central banking conference in Budapest on Monday, he said the NBP was not in any rush to tighten as the current price shock was much smaller than the one induced by Russia's 2022 invasion of neighbouring Ukraine.
"The Polish economy has a very good starting position to withstand the consequences" of the current price shock, Glapinski said, noting robust economic growth of around 3.5% and no macroeconomic imbalances.
"We take our time to assess the implication of the current energy shock on the medium-term inflation prospects, while we stand ready to act if necessary," he said. "We remain data dependent and do not pre-commit to any specific course of action."
Poland's annual inflation accelerated to 3.2% in April, above an average forecast of 2.9% from analysts, driven mainly by rising fuel prices.
Glapinski also cautioned against the premature adoption of the euro currency, which he said could destabilise Poland's economy and lead to a boom and bust cycle.
"The result could be ... an initial acceleration in GDP growth driven by credit expansion, followed by a deep recession, rising unemployment, and protracted loss of competitiveness," he said.
(Reporting by Balazs Koranyi and Gergely Szakacs; Editing by Edwina Gibbs)
By Balazs Koranyi and Gergely Szakacs
