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Poland Monetary Policy January 2022

Poland: Central Bank hikes rates again in January

At its meeting on 4 January, the National Bank of Poland (NBP) raised the reference rate by 50 basis points to 2.25%, matching the move it made in December and marking the fourth consecutive rate hike. The NBP also raised the lombard rate to 2.75%, the rediscount rate to 2.30% and the deposit rate to 1.75%.

The NBP’s decision came amid rising price pressures, with inflation hitting an over 20-year high of 7.8% in November. While the Bank continues to attribute this mostly to transitory factors, it now sees inflation remaining elevated for longer than previously expected. 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 an increase of between 25–75 basis points across the first quarter of this year.

Regarding the outlook, Malgorzata Krzywicka at Erste Bank commented:

“Today’s decision came as no surprise and we think that the NBP will continue raising rates in coming months. Given recent announcements (massive increases of gas and electricity prices), we expect the NBP to lift the key rate by another 50bp to 2.75% at its next meeting in February. All in all, we see the key rate at least at 3.25% by mid-2022. In our view, the NBP could further increase the rates in H2 2022 such that the key rate would reach 4.0% by the end of 2022.”

The next monetary meeting is scheduled for 8 February.

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