Salaries continue to rise, interest rates to follow

In May salaries grew by almost 9% and employment by 4.4%. "Wages grew faster than analysts and the market had expected. It is clear that the pressure to increase salaries is getting stronger," stated Michał Chyczewski, an economist with Bank BPH. Economists believe that this may mean that interest rates hikes are inevitable. Chyczewski predicts that the Monetary Policy Council (RPP) will increase the rates even later this month. "We must wait for the data on industrial output. It probably grew by 8.5% yoy. But even if it increased by around 10%, it will still mean that in May salaries grew faster than labor productivity, which may motivate the RPP to tighten monetary policy," stated Chyczewski. Piotr Kalisz, an economist with Citibank Handlowy, forecasts that the RPP will increase the interest rates each quarter by 25 basis points until they hit 5.5%. (Rzeczpospolita, p. B1; Puls Biznesu, pp. 1, 15; Dziennik, Wall Street Journal supplement, p. 2) E.B.