Experts believe that MPC will raise interest rates on Thursday by another 100 bp

The Monetary Policy Council (MPC) will raise rates by another 100 bp during its meeting on May 5, thus increasing the reference rate to 5.5 percent, Ebury analysts believe.

"We cannot rule out an even stronger move, given the bank's newfound preference for surprising the market. However, we believe it is less likely this time – the expected scale of the move is already huge," analysts said.

A surplus of inflation alone would be a sufficient argument for continuing interest rate increases, however, aggressive monetary policy tightening is also supported by other factors – strong macro data, as well as fiscal easing, large current account deficit and weak zloty.

"We believe that in the short term the NBP will be one of the central banks that will be the least worried about the risks to economic growth. Inflation has been systematically surprising upwards, while all signs suggest that Poland’s economic growth in the first quarter was very strong and amounted to around 8 percent y/y. Similar to March, the inflation momentum in April was very strong and indicates the need for active action," the release reads.

(ISBnews)