Poland's inflation rate continued to slow in February, Poland's statistics office reported on Thursday. The headline consumer price index (CPI) inflation rate fell to 1.3 percent in February in annualized terms, down from the 1.7 percent recorded in January.

The inflation rate is now well below the target of 2.5 percent set by the interest-rate setting Monetary Policy Council (RPP), and has now even fallen below the plus or minus 1-percentage-point band of tolerance that the RPP observes.

The figures indicated a further slowing of the Polish economy, and could leave room for further interest rate cuts. However, that may be unlikely, since Marek Belka, head of the RPP and president of the National Bank of Poland said earlier this month that the council's most recent 50 basis-point cut was a “full stop” at the end of its easing cycle.

At the time however, Mr Belka didn't rule out further cuts, saying the council was now in “wait-and-see” mode, and that it would take into account further economic data. The RPP has cut interest rates by 1.50 percent since November.

For its part Danske Bank released a note before the figures were announced saying that macroeconomic data in the coming days would be bad enough to convince the RPP to cut rates further.

“Even though the NBP signaled that last week's cut was the end of the cutting cycle, next week's numbers could be a reminder that it should not stay on hold,” the bank's analysts said.

But Jan Winiecki, a member of the RPP, said that the lower inflation rate was due to one-offs, and that Poland's pending recovery should push readings back towards 1.5-2 percent, the Polish Press Agency reported.

Andrew Kureth