Central bank rules out rate hikes despite rising inflation

"Regardless of the level of interest rates and other elements of monetary policy, the prices would have still increased and nothing would have changed that," Adam Glapiński, governor of Poland's central bank, said. Andrzej Lange/PAP

The National Bank of Poland (NBP) will consider reversing its low interest rates policy no earlier than in mid-2022, the NBP governor has said, defying calls to raise the rates amid record-high inflation.

For several months, Poland has been suffering from one of the highest inflation rates in the EU, and the April CPI figure hit 4.3 percent amid rising food and fuel prices, the highest level since February 2020.

"Regardless of the level of interest rates and other elements of monetary policy, the prices would have still increased and nothing would have changed that," Adam Glapiński, governor of Poland's central bank, said.

"I'd like to ensure you that, if there are reasons for changing the monetary policy, we'll not waste a single month and we'll start doing it," he added.

"Let me reiterate, in light of today's knowledge, we'll probably start thinking about it in the middle of next year," he went on to say.

Poland's interest rates have been at record low levels since the spring of 2020, when they were reduced in a series of rapid cuts as the coronavirus pandemic gripped the country's economy. Poland's reference interest rate is now at 0.10 percent.

The low interest rates have been eroding the savings of Poles. More and more people have been terminating their term deposits at banks, which often provide zero interest, and transferring the money to current accounts as well as into real estate, currencies or stocks.

Over the past year, the prices of existing flats in Poland have increased by 7 to 13 percent, depending on the city, according to the website pieniadze.rp.pl run by the Rzeczpospolita daily.