Poland's central bank raises reference interest rate by 50 bps

Poland's Monetary Policy Council (RPP) increased the reference interest rate by 50 basis points to 2.25 percent on Tuesday.

The National Bank of Poland's Lombard rate was also raised from 2.25 percent to 2.75 percent, the rediscount rate from 1.80 percent to 2.30 percent, and the discount rate from 1.85 percent to 2.35 percent.

The reference rate increase was in line with the market expectations.

At the same time, the RPP also increased the deposit rate from 1.25 percent to 1.75 percent.

This is the fourth interest rate hike in a row after a 40-bps increase in October, a 75-bps hike in November and a 50-bps follow-up in December.

The hikes are seen by economists as a reaction to rising inflation.

Before the latest increases, Poland's RPP cut rates by 140 bps in three moves back in the first half of 2020 as the coronavirus pandemic struck the economy, leaving the reference rate close to zero, at 0.10 percent. The rate had previously been frozen at the 1.5-percent mark since March 2015.