Poland: Central Bank raises interest rates in April
April 5, 2011
At its latest monetary policy meeting held on 4-5 April, the Central Bank increased interest rates by 25 basis points to 4.00%, in a decision that was widely expected by the market. The Bank resumed the tightening cycle after leaving interest rates unchanged at its previous meeting held on 1-2 March. Monetary authorities increased interest rates in January 2011 for the first time after leaving them unchanged since June 2009, when the policymakers cut rates to a record low of 3.50%. The Monetary Policy Council (MPC) justified its hawkish move by pointing to increasing prices of food and crude oil in the global markets, which contributed to inflationary pressures. The Central Bank stated that ?continuing economic recovery in Poland and further employment growth may gradually increase wage and inflationary pressures in the medium term?. In March, inflation jumped to 4.3%, exceeding the 1.0 percentage point tolerance margin of the Central Bank's 2.5% target.