Poland’s rate-setting body has argued that the 11 interest hikes it has carried out so far should be enough to bring down the consumer price index (CPI) amid weakening global sentiment and inflation falling across major countries.
The Monetary Policy Council (RPP) left rates unchanged for the fourth time running on January 4 following 11 consecutive increases aimed at curbing inflation, keeping the reference rate at 6.75%.
RPP said that “the expected weakening of the external economic conditions, together with monetary policy tightening by major central banks, will curb global inflation and commodity prices.”
The rate-setter said that global economic conditions would likely be a headwind to Poland’s economic growth.
In these circumstances, “the hitherto significant monetary policy tightening by NBP (Poland’s central bank) will support a decline in inflation in Poland towards the NBP inflation target.”
The Polish central bank inflation target is 2.5% plus/minus 1%.
“At the same time, given the strength and persistence of the current shocks that remain beyond the impact of domestic monetary policy, in the short term inflation will remain high, and its return to the NBP inflation target will be gradual,” RPP warned.
The rate-setter also observed that a stronger zloty, Poland’s national currency, would help bring down inflation.
But RPP hinted that despite the rate-hike pause, it might continue to raise rates depending on “incoming information regarding perspectives for inflation and economic activity, including the impact of the Russian military aggression against Ukraine on the Polish economy.” (PAP/Business World Magazine)
