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Most MPC members do not rule out interest rate hike if inflation remains high

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Date: 2012-01-27 08:26

During the January sitting of the Monetary Policy Council (MPC), most MPC members were of the opinion that should the relatively fast domestic growth, elevated inflation and high inflation expectations continue, the increase in NBP interest rates cannot be ruled out, according to the sitting's "minutes," published by the National Bank of Poland (NBP).


The March CPI projection will be helpful in this respect, the central bankers stressed.

Most members of the Council emphasized that a possible future decision to raise the NBP interest rates would be justified if the economic activity were to decelerate only slightly and inflation were not be in a clear downward trend.

At the same time, few members of the Council argued that in case of a considerable economic slowdown or a significant appreciation of the Polish zloty, a cut in the NBP interest rates may prove justified, the central bank reported. MPC members also pointed to a higher than expected rise in inflation in November of 2011 and an upward revision of inflation forecasts for the coming year, both resulting to a large degree from the hitherto depreciation of the zloty.

It was pointed out that the persisting elevated inflation was accompanied by a considerable rise in inflation expectations of individuals and enterprises.

In January, MPC kept interest rates unchanged, in line with market expectations, with the key market intervention rate at 4.5% since June of 2010.