May's bad inflation figure may force National Bank to raise interest rates

The cost of borrowing on the inter-banking market has increased dramatically and speculation is growing the National Bank Poland (NBP) is about to raise interest rates. Analysts say its very unlikely there will be an interest-rate cut this year. The Monetary Policy Council (RPP) will have to take action as well. Economic forecasts had predicted inflation would reach 6.8 % by the end of the year. Interest rates would then have fallen accordingly and demand on the domestic market would have grown. In light of May's 10% inflation rate, the council will meet on Wednesday to discuss the situation. The cost of loans increased by 0.1% last week after May's inflation figure was announced. The council is under pressure to raise interest rates to show it is committed to implementing this year's macroeconomic targets. (Gazeta Wyborcza, page 28) J.K.