The last time the MPC changed interest rates in Poland was on their August meeting increasing them by 25 basis points. It was the third interest rate hike in a row this year. In order to fight inflation the MPC raised the cost of money in April and June.

Analysts expect that the MPC will raise interest rate on their November meeting to 5.0%. For a stronger monetary policy are opting experts who noticed speeding inflation, which was mainly caused by a stronger Złoty. In September, CPI in Poland increased to 2.3% on yearly basis compared to 1.5% in August. In October it is forecasted that inflation will grow to 2.6% and to 2.9% till the end of the year. That is more than the inflation goal of the Polish Central Bank of 2.5%.

The market expects interest hikes, one till the end of 2007 and at least one more in the first quarter of 2008. The Polish currency did not react nervously to the announcement of the MPC. The EURPLN was being quoted at zł.3.6410 just before the decision and at zł.3.6402 just after. The USDPLN stayed at zł.2.5230 and at zł.2.5216 respectively.

Adam Narczewski