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    The Monetary Policy Council decided to increase the NBP interest rates by 75 bps

    The Monetary Policy Council (RPP), the Polish central bank’s rate-setting body, increased the reference interest rate by 75 basis points (bps) to 5.25 percent on Thursday.

    The National Bank of Poland’s Lombard rate was also raised from 5.0 percent to 5.75 percent, the rediscount rate from 4.55 percent to 5.30 percent, and the discount rate from 4.6 percent to 5.35 percent.


    At the same time, the RPP also increased the deposit rate from 4.0 percent to 4.75 percent.


    “The NBP will continue to take all necessary steps to ensure macroeconomic stability, and, above all, to reduce the risk of enduring inflation,” read a statement issued after the RPP meeting.


    The RPP wrote that its further decisions would depend on data regarding future inflation and economic activity, with a special emphasis on the impact Russia’s attack on Ukraine is having on the Polish economy.


    Having repeated that inflation was likely to exceed the central bank’s target, the RPP wrote that it had decided to raise interest rates in order to curb inflationary pressure.


    According to the RPP, Poland’s economic sentiment is expected to be positive in the coming quarters but economic growth is likely to slow down.


    The RPP also said that the central bank could carry out a foreign exchange intervention in order to limit zloty fluctuations.


    The latest hike is the eighth in a row and is seen by economists as a reaction to rising inflation and the weakening national currency.


    The Polish zloty has fallen against the euro, despite FX interventions taken by Poland’s central bank and the finance ministry, due to market uncertainty caused by the war in Ukraine.


    Meanwhile, the prices of consumer goods and services (Consumer Price Index, CPI) increased by 12.3 percent year on year and by 2.0 percent month on month in April 2022, according to the Central Statistical Office (GUS). 


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