FILE PHOTO: A man looks at meat products at a market in Gdynia, Poland. January 31 2019. REUTERS/Matej Leskovsek
January 4, 2022
By Anna Koper and Alan Charlish
WARSAW (Reuters) -Poland’s central bank raised interest rates on Tuesday and suggested further tightening was on the horizon as the country grapples with the fastest price growth in over two decades.
The National Bank of Poland raised the main rate by 50 basis points to 2.25%, delivering the fourth hike in as many months. The decision was in line with analysts’ estimates.
“Decisions of the Council in the coming months will continue to be aimed at reducing inflation to a level consistent with the NBP inflation target in the medium term,” the Monetary Policy Council (MPC) said in a statement.
Like other countries around the world, including in central and eastern Europe, labour shortages, fast-growing wages, supply-chain disruption and rising energy costs have pushed consumer prices in Poland.
The Polish central bank targets inflation of 2.5% plus or minus one percentage point.
National Bank of Poland (NBP) Governor Adam Glapinski, who has faced criticism from some economists for being too slow to react, was quoted as saying in December that inflation in 2022 would be higher than previously thought, averaging 7.6%, driven mainly by energy prices.
Poland’s Consumer Price Index was at 7.8% in November according to statistics office data, and Glapinski has said the central bank now expects it to peak at 8.3% in June.
“This significant deviation of inflation from the central bank’s 2.5% target, even if driven by factors outside of the MPC’s control, will prompt the central bank to continue raising interest rates in the coming months,” said Liam Peach, Emerging Europe Economist at Capital Economics.
Analysts polled by Reuters expect the main rate to rise to 3.5% by the end of 2022.
“There persists a risk of inflation running above the NBP inflation target in the monetary policy transmission horizon,” the bank said in its statement.
The Polish zloty was 0.23% firmer on the day at 1602 GMT.
(Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz and Anna Wlodarczak-Semczuk; Editing by Frank Jack Daniel)