Rate hike shocker
This rate increase was twice as much as the market had anticipated. Analysts expected a much smaller increase because of weaker economic figures for July, lower acceleration of the CPI index and high unemployment keeping salaries at a steady level. The RPP's move resulted in strengthening domestic currency and improving the profitability of T-bonds. The Council justified the rate hike as being a response to projections of inflation in August. According to the information the CPI will reach between 2.1-5.4 percent in Q4 2004. (Poland A.M.)
"I would like to stress that this is only a projection and not a forecast. This scenario will not occur thanks to our decision."
- NBP chairman Leszek Balcerowicz
"If the inflation projections showed that the rates had to be raised I will not discuss the decisions made by the Council. The raise would, however, result in an increase of costs of investments."
- Finance Minister Marek Gronicki
"I would like to stress that this is only a projection and not a forecast. This scenario will not occur thanks to our decision."
- NBP chairman Leszek Balcerowicz
"If the inflation projections showed that the rates had to be raised I will not discuss the decisions made by the Council. The raise would, however, result in an increase of costs of investments."
- Finance Minister Marek Gronicki
