Poland’s Monetary Policy Council (RPP), the Polish central bank’s rate-setting body, believes that the current interest rate level is optimal, the central bank governor has said.
“The council considers the current interest rate level, which has reached 6.75% following 11 increases, as optimal,” Adam Glapinski told reporters.
The RPP left rates unchanged for the third month running on December 8 and kept the reference interest rate at 6.75%. The lombard rate remained at 7.25%, the rediscount rate at 6.80% and the discount rate at 6.85%.
“This is the level which has strongly frozen economic sentiment, and practically limited mortgage lending to a minimum,” Glapinski continued, adding that the number of consumer loans had also gone down.
The central bank governor declared that if inflation continued to be persistent, the RPP would surely increase interest rates.
He also said that the RPP had not yet decided to end the cycle of interests rate increases.
“We are in limbo for the time being,” he said.
Glapinski stated that the RPP could take a decision regarding the end of interest rate increases after it had got acquainted with a March inflation projection.
“March’s projection will tell us a lot. I hope that it will tell us that inflation is going down and we will be finally convinced that it is a lasting trend,” he said.
According to Glapinski, only then could the RPP start a debate on whether it would be possible to end the cycle of interest rate increases. (The First News/Business World Magazine)