Poland’s Monetary Policy Council on Wednesday approved a rise of 0.25 percent on the basic interest rate.
The decision had been expected and means that the central bank’s interest rate now stands at 6.75 percent. It is the eleventh rise in a row since October of last year, and the decision sparked off an upturn in share prices on the Warsaw Stock Exchange.
Poland’s interest rate has been quite a roller-coaster over the last two years. Back in the spring of 2020 during the coronavirus pandemic, the interest rate had fallen to 0.1 percent. However, since the autumn of last year, with inflation climbing steeply, the situation has changed dramatically.
Analysts believe that there is little room for further increases. The expected downturn in economic activity and decline in mortgage lending will be more likely to contain inflation than further interest rate rises. It is probable that the central bank would not have asked for such a rise in the interest rate had the August inflation figure not climbed above July’s 15.5 percent to 16 percent.
Most forecasters expect the central bank to adopt a “wait and see” attitude in the immediate future, with few expectations of a further rise in the interest rate in October. However, an unexpectedly bad set of inflation figures in September could lead to another increase.