Poland’s central bank raises reference interest rate by 75 bps
Poland’s Monetary Policy Council (MPC) increased the reference interest rate by 75 bps to 1.25 percent on Wednesday following a lengthy meeting.
The National Bank of Poland's lombard rate has been raised from 1.0 percent to 1.75 percent, the rediscount rate from 0.51 percent to 1.30 percent, and the discount rate from 0.52 percent to 1.35 percent.
At the same time, the deposit rate has been raised from 0.00 percent to 0.75 percent.
The increase exceeds the PAP consensus survey estimate of 50 bps, which was conducted shortly before the MPC meeting. The reference rate is now 1.25 percent. Expectations in the median forecast placed the main interest rate between 1.75 and 2.00 percent at end-2022. It is the highest increase since 2015.
Soaring inflation and a surprise 40 bps increase in October made most local pundits predict a further rise of rates. The median forecast points now to the reference rate reaching 1.25 percent in March 2022 compared to 0.25 percent predicted a month earlier.
Economists interviewed by PAP expect Polish inflation to exceed 7 percent by the year end. Piotr Patkowski, a deputy finance minister said on Tuesday that CPI could reach 7-8 percent this year.
Before October’s rate rise, Poland's MPC cut rates by 140 bps in three moves back in H1 2020. The reference rate had previously been frozen at the 1.5 percent mark since March 2015.