Central bank hikes interest rate by 25 basis points to 6.75%

The Monetary Policy Council raised interest rates by 25 basis points on Wednesday, in line with market expectations. This is the eleventh hike in a row, after which the rate stands at 6.75% as Poland struggles to contain inflation. In August, inflation amounted to 16.1%, reaching the highest level since March 1997, preliminary data from the statistical office showed.

BNP Paribas economists expect that the central bank could raise the reference rate this year once more to 7%. “We believe that amid falling economic activity, the MPC will raise the reference rate this year by a maximum of 25 basis points,” they said on Twitter. In their view, the regulator may return to tightening monetary policy at the beginning of 2023, "when the economy starts to gain momentum again".

Prime Minister Mateusz Morawiecki said on Tuesday that he believes the cycle of rate hikes in Poland should come to an end soon. The central bank started a series of rate hikes in October 202. In just over six months, the regulator raised the reference rate from the lowest in history (0.1%) to the highest since 2005.

(money.pl)