Polish central banker says rate hike needed if inflation hits 3.5% in 2022

If the Polish central bank’s November projection shows consumer price inflation persistently above 3.5% in 2022 and 2023, higher rates will be necessary, Monetary Policy Council (MPC) member Rafal Sura said in an interview with ISBnews published on Monday.

Inflation in Poland is expected to remain above the central bank’s target range of 2.5% plus or minus one percentage point in the coming months, but governor Adam Glapinski has said he views this as a temporary phenomenon driven by factors that monetary policy does not influence, like fuel prices.

“If this document (the November projection) shows that inflation in 2022 and 2023 will permanently exceed 3.5% and will be increased by demand factors … then I will point out the need to raise interest rates,” Sura was quoted as saying.

Sura added that he thought that currently monetary policy “was on the right track”.

Poland’s main interest rate has been at a record low of 0.1% since May 2020.

Sura also said that the lower amount of bonds purchased during the central bank’s last bond-buying operation should not be taken as a monetary policy signal.

Polish bond yields rose on Wednesday after the central bank bought securities worth 2.03 billion zlotys ($551.56 million), less than a third of what investors had offered to sell.

Some market participants had taken this as a sign that the central bank could be winding down its asset purchases, a move that would open the door to raising rates.

“The smaller scale of purchases at the last auction should not be interpreted as a signal of a change of course in monetary policy,” Sura was quoted as saying. “The NBP has been clear for a long time that the pace and scale of purchases depend on market conditions.”

Sura also said that he would not support any change in the required reserve rate.


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