Bigger-Than-Expected Central Bank Policy Rate Hike in Poland

November 3, 2021

A 75-basis point increase in Poland’s central bank reference rate followed a 40-basis point hike at the prior October meeting and, at 1.25%, will lift the rate level to within 25 basis points of its pre-pandemic 1.5% level. According to a released statement from the Monetary Policy Council,

The rise in global prices of both energy and agricultural commodities observed this year as well as continued global supply chain disruptions have led to an increase of inflation forecasts for the coming quarters both globally and in Poland. Amidst expected further economic recovery and favorable labor market conditions, it would generate a risk of inflation remaining elevated in the monetary policy transmission horizon.

On-year Polish CPI inflation has already advanced from 2.4% last February to 6.8%, well above the medium-term target range of 1.25-3.25%. On-year GDP growth of 11.1% in 2Q 2021 was above zero percent for the first time in five quarters.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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