Poland’s Hardt Sees 50 Basis-Point Rate Hike in January
Poland’s Hardt Sees Rates Rising by 50 Basis Points in January
(Bloomberg) -- Poland will probably raise its main interest rate by 50 basis points in January, which would mark a fourth consecutive monthly increase, said Lukasz Hardt, a member of the Monetary Policy Council.
In an interview with RMF FM radio on Saturday, Hardt said Poland will likely need more increases to fight high inflation. The nation’s consumer price index may peak in December at slightly above 8%, he told the broadcaster, adding that he doesn’t expect the gauge to reach double digits.
Polish inflation hit a two-decade high of 7.7% in November, more than three times the central bank’s medium-term goal of 2.5%. The scale of future tightening will depend on upcoming inflation and economic growth data, including the situation in the labor market, the central bank said on Wednesday after raising the main rate by 50 basis points.
Central bank Governor Adam Glapinski, who resisted calls for much of the year to follow the Czech Republic and Hungary in tightening monetary policy, began lifting rates in October as inflation became a hot-button political issue. The main rate has risen to 1.75% from 0.1% since then.
Inflation should start to slow in the coming quarters and return to the central bank’s target at the end of 2023, Hardt said on Saturday. Temporary cuts to energy taxes introduced by the government will help lower inflation by 1 to 1.5 percentage points in the early months of 2022, he said.
He said the council had been late to start raising rates, and called for better communication from the central bank to help strengthen the zloty.
“A slightly stronger zloty would certainly help us,” Hardt said, adding that the bank’s communication, especially on its Twitter account, isn’t always professional and doesn’t help build credibility of the institution.
The currency’s weakness is a result of various factors, including the delay in the European Commission’s decision to approve Poland’s recovery fund, as well as bank’s internal politics, which “lately haven’t been strongly directed at strengthening the zloty,” he said. The commission’s decision to grant the money should boost the currency, which should in turn help lower prices for imports.
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Asked whether he would expect President Andrzej Duda to reappoint Glapinski for a second term as governor, Hardt said he didn’t want to speculate.
“It’s a political decision and it’s a difficult decision,” he said.
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