Poland hikes rates to 14-year high as central bank battles inflation

WARSAW, June 8 (Reuters) – Poland’s central bank on Wednesday raised its main interest rate to its highest level since 2008, raising the cost of credit by 75 basis points to 6.00%, as it struggles against inflation levels not seen for almost a quarter of a year. century.

Russia’s invasion of Ukraine poses a dual threat to Central European economies, on the one hand fueling price growth by disrupting global supply chains and commodity markets, and on the other share creating the risk of slowing growth as business confidence weakens.

“A continuation of relatively favorable economic conditions can be expected in the coming quarters, although a further slowdown in economic growth is expected, while the national and global outlook is subject to significant uncertainty,” said the National Bank of Poland (NBP) in a press release. A declaration.

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Central bankers in Hungary and the Czech Republic have signaled that growth risks mean they will slow the pace of policy tightening.

In May, the National Bank of Hungary (NBH) raised its main interest rate by just 50 basis points, half the pace of rate hikes in recent months.

However, after the NBP raised rates less than expected in May, Governor Adam Glapinski said that was not a sign of a slowdown in the tightening in Poland.

“We believe a backdrop of tight labor market conditions and soaring inflation will drive further significant increases in upcoming meetings,” said Liam Peach, Emerging Europe economist at Capital Economics.

Inflation in Poland was 13.9% in May according to a flash estimate from the statistics office, well above the central bank’s target range of 1.5% to 3.5%.

“High inflation is mainly the result of a sharp rise in world prices for energy and agricultural commodities – driven, to a large extent, by the fallout from Russian military aggression against Ukraine – and earlier increases regulated tariffs,” the NBP said.

Of 20 analysts polled by Reuters ahead of Wednesday’s decision in Poland, 15 forecast a 75 basis point hike, four forecast a 50 basis point increase and one a 100 basis point increase.

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Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz and Anna Wlodarczak-Semczuk; Editing by Mark Heinrich and Alison Williams

Our standards: The Thomson Reuters Trust Principles.

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