Poland Monetary Policy September 2022


Poland: Central Bank hikes rates by 25 basis points in September

September 8, 2022

At its meeting on 7 September, the National Bank of Poland (NBP) raised the key reference rate by 25 basis points from 6.50% to 6.75%, in line with market expectations. This marked the 11th consecutive rate hike since it began its tightening cycle in October 2021. The NBP also raised the Lombard rate to 7.25%, the rediscount rate to 6.80% and the deposit rate to 6.20%—from 7.00%, 6.55% and 6.00%, respectively.

The NBP decided to hike in response to surging price pressures, with inflation hitting a 26-year high of 16.1% in August (July: 15.6%) amid disrupted supply chains, higher energy and agricultural costs due to the war in Ukraine, and increased energy tariffs. The Central Bank expects the same factors to continue fueling price pressures in the coming quarters. However, higher interest rates, the fading impact of current shocks and the appreciation of the zloty should then contribute to a gradual decline in inflation.

In its communiqué, the NBP reiterated that its decisions will remain driven by data and by the impact of the ongoing war in Ukraine on the Polish economy.

Commenting on the near and medium-term outlook, Adam Antoniak and Rafal Benecki, economists at ING, stated:

“The key changes in the communiqué suggest that the Council is strongly counting on the economic slowdown to reduce inflation. However, we are concerned that the GDP slowdown alone will not materially accomplish this goal. The latest energy shock is so powerful that companies will continue to pass on costs to product prices, even in a weaker economy. We also expect a large fiscal expansion in 2023.”

The next monetary meeting is scheduled for 5 October.

FocusEconomics Consensus Forecast panelists are still assessing the latest developments and new forecasts will be released on 13 September.

Author: Massimo Bassetti, Senior Economist

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