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Poland Monetary Policy February 2022

Poland: Central Bank hikes rates a further 50 basis points in February

At its meeting on 8 February, the National Bank of Poland (NBP) raised the reference rate by 50 basis points to 2.75%, matching the moves it made in December and January, and marking the fifth consecutive rate hike. The NBP also raised the Lombard rate to 3.25%, the rediscount rate to 2.80% and the deposit rate to 2.25%.

The NBP’s decision came amid rising price pressures, with inflation hitting 8.6% in December and subsequently rising to an over 20-year high of 9.2% in January. While the Bank continues to attribute this mostly to transitory factors, it now sees inflation “remaining at an elevated level also in 2022”. As such, the NBP decided to hike rates to mitigate the risk of inflation staying above its 1.5%–3.5% target band in the medium term.

In its communiqué, the NBP stated that “decisions of the Council in the coming months will continue to be aimed at reducing inflation to a level consistent with the NBP inflation target in the medium term”. As such, the majority of our panelists see a further increase of 50 basis points at the next meeting in March.

Regarding the outlook, Kevin Daly and Tadas Gedminas, economists at Goldman Sachs, commented:

“Set against a more challenging inflation backdrop this year, we expect policy tightening to continue and for policy rates to reach 4.00% in Poland in the coming months, and we view the risks around this forecast as being skewed entirely to the upside. We think this is also consistent with the recent guidance by NBP Governor Adam Galpinski who stated that rates in Poland could reach 4.00% in a ‘good growth scenario’.”

The next monetary meeting is scheduled for 8 March.

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