Current interest rate level is optimal says central bank head

Glapiński 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. Radek Pietruszka/PAP

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 percent following 11 increases, as optimal," Adam Glapiński told reporters on Thursday.

The RPP left rates unchanged for the third month running on Wednesday and kept the reference interest rate at 6.75 percent. The lombard rate remained at 7.25 percent, the rediscount rate at 6.80 percent, and the discount rate at 6.85 percent.

"This is the level which has strongly frozen economic sentiment, and practically limited mortgage lending to a minimum," Glapiński 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.

Glapiński 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 Glapiński, only then could the RPP start a debate on whether it would be possible to end the cycle of interest rate increases.