Poland Monetary Policy


Central Bank raises interest rates to tame rising inflation

At its latest monetary policy meeting held on 18-19 January, the Central Bank decided to raise interest rates by 25 basis points to 3.75%. The decision followed on 18 straight months of interest rates remaining at a record low of 3.50%. The rate hike came as no surprise to market analysts, who had expected a hawkish move to curb rising inflationary pressures after headline inflation rose to a one-year high of 3.1% in December. Following a comment by Central Bank Governor Marek Belka that January's increase in interest rates is not a ?one-time adjustment?, analysts expect the monetary tightening cycle to continue throughout 2011. Prospects of a tighter policy prompted the zloty to appreciate, which should help curbing inflation. The Monetary Policy Council (MPC) confirmed the inflation target for 2011 at 2.5% with a tolerance margin of 1 percentage point. The next monetary policy meeting is scheduled for 15 February 2011.


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