The MPC will continue to raise interest rates

Ebury assumes that the Monetary Policy Council will raise interest rates once again on Tuesday. The consensus expects an increase of 50 bp, ie on the same scale as in the previous two months. These expectations are not unreasonable, but we assume that the decision-makers will decide to make a slightly larger increase, by 75 bp, which would lead to an increase in the reference rate to 3%. In addition to the scale of the move, in the context of the meeting, we will also focus on rhetoric regarding further steps and in the context of the zloty, especially after the recent comments of President Glapiński on this subject.

"Our expectations are strengthened by many factors, including the real risk of double-digit inflation at the beginning of the year and the persistence of price pressure longer than previously assumed, due to, inter alia, still dynamically rising market prices of raw materials and energy. Risks that may strengthen inflation remain in force, including possible escalation on the Russia-Ukraine line and the epidemic in China. Apart from inflation and the risks to it, the legitimacy of rate hikes is indicated by other data from the economy, including those from industry and the labor market," Roman Ziruk, an Ebury analyst, assessed.

(WBJ)