Central bank will raise rates when CPI is demand-driven - governor

Andrzej Lange/PAP

The Polish central bank will start raising its record-low interest rates when inflation, which is above 4 percent now, starts to be driven by domestic demand, the governor of the National Bank of Poland (NBP) has said.

Speaking to the right-wing Salon24.pl website, Adam Glapiński said that currently "inflation is being boosted by external factors, and to a large extent transitional ones, so there are no reasons for changing interest rates."

Poland's reference rate has been close to zero percent for more than a year now. It was reduced in a series of rapid cuts when the coronavirus crisis gripped the Polish economy last spring. So far, the central bank has refused to raise the rates despite rising inflation and strong economic growth figures.

"However, I promise that we will raise the rates if there are conditions for it, for example when inflation is demand-driven and there's strong economic growth," Glapiński said.