Inflation to remain high in short term says rate-setter

Rafał Guz/PAP

Inflation in Poland will remain high in the short term, and its return to the central bank's target band will be gradual, the Monetary Policy Council (RPP) said in a statement after a no-change rate decision on Wednesday.

The RPP kept interest rates unchanged for the third month in a row, leaving the main interest rate at 6.75 percent, far below November's 17.4 percent CPI figure.

Explaining its decision, the RPP said that Poland's inflation will probably go down as a result of the restrictive policies of the world's major central banks, which will help curb global inflation and commodity prices across the globe. Poland is expected to experience weaker growth next year which will also ease inflation pressures, the RPP said.

The rate-setter also said that the eleven rate hikes it had made so far should ultimately help bring inflation to the central bank's target band of 2.5 percent plus/minus 1 percentage point.

"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," the RPP added.

It also said its further decisions would depend on data concerning the prospects of inflation and economic activity as well as the impact of Russia's invasion of Ukraine on the Polish economy.