High inflation to continue for 2-3 years says head of gov't agency

Poles will likely have to endure elevated inflation levels for the coming two to three years, according to Pawel Borys, head of the Polish Development Fund (PFR).

Speaking to private TV news channel TVN24 on Wednesday, Borys said that the central bank's inflation forecasts had been conservative and had not predicted the rise in inflation.

"Inflation will be with us for at least two to three years," Borys said. "We hope that it will reach its maximum in the third quarter and will start falling next year," he added.

"Inflation was at about 5 percent until September," Borys pointed out. "It seemed to be under control. But it shot up in September when prices of food and gas went up," he added.

He went on to say that for the past two years economists had often been incorrect in their forecasts due to a number of unpredictable events.

"However, interest rates must rise a bit more," he added.

Poland's reference interest rate is now at 4.5 percent, but most economists expect the central bank to continue its rate-hike cycle and announce another hike on Thursday.

According to the PFR head, "the first level where we can try to stabilise the rates is between 5.5 percent and 6 percent."

"If it turns out that inflation keeps rising, we'll have to approach 7 percent," he said, adding that, in the latter scenario, inflation was likely to peak at 13-14 percent.

Poland's inflation rate reached 12.3 percent in April.