According to Eugeniusz Gatnar from the Monetary Policy Council (RPP) interest rates should be increased early next year to offset rising inflationary and wage pressures. “If wage pressures rise in line with my expectations and inflation comes near the target then I would expect interest rates to be raised in the first quarter of next year,” he said in an interview with Reuters. He added that he is in favor of a gradual, 25 basis point tightening.
He warned that factors such as lower retirement age, growing wages, and employment, as well as the traditional fall increase in food prices will drive the inflation, which could result in “irrational consumption” as lending rates could stay below inflation for some time, he added.
“There is a growing awareness among the Monetary Policy Council of the adverse effects that come from real interest rates staying negative for a long time. This is visible even in the monthly ‘minutes’,” he said.
The RPP has kept benchmark rates at a record low of 1.5 percent since March 2015.