Poland’s interest rates are likely to remain unchanged until early-2022 when the term of the current policy-making body ends, Capital Economics said Wednesday.
The National Bank of Poland left the key interest rate unchanged at 1.50 percent on Wednesday, as expected.
Headline inflation has accelerated to 2.6 percent in June from 0.7 percent in January, largely driven by food and fuel prices.
Thus, it breached the central bank’s target of 2.5 percent for the first time since 2012, Capital Economics economist Liam Carson said.
Core inflation also accelerated during this period, prompting several policymakers to turn hawkish, the economist pointed out.
However, monetary tightening is unlikely in the medium term as five out of ten MPC members remain on the dovish side, including the NBP Governor Adam Glapinski. The governor has the deciding vote in case of a tie.
“To persuade some of the doves to shift sides, headline inflation would probably have to rise above the upper-bound of the NBP’s 1.5-3.5 percent target range on a sustained basis,” Carson said.
“We think that this is unlikely.”
The economist expects the bank to raise its inflation forecast for this year and next, and the post-decision communication to reflect the more hawkish tone adopted by some policymakers.
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