Polish central bank expected to keep up pace of policy tightening – Reuters poll

1 min read

By Alan Charlish

WARSAW (Reuters) – Poland’s central bank is expected to raise its main interest rate by 75 basis points to 6.00% on Wednesday, a Reuters poll showed, as it faces surging inflation and risks of slowing growth due to the Ukraine war.

Worries over growth have led other central banks in the region to signal that they will slow the pace of monetary policy tightening, but despite a smaller-than-expected hike in May Central Bank Governor Adam Glapinski said this was not the case in Poland.

With inflation rising to 13.9% in May from 12.4% in June, most economists expect the Monetary Policy Council (MPC) to deliver a hike of the same magnitude as last month’s, when it raised the main rate to 5.25% from 4.50%.

“The MPC members are constantly confirming that they will continue the tightening cycle as long as inflation keeps growing,” said Marta Petka-Zagajewska, head of the macro research team at PKO Bank Polski, which is forecasting a 75 basis point hike.

“There is still no space for the MPC to even try to stop the tightening cycle.”

However, with S&P Global Poland’s Manufacturing Purchasing Managers’ Index (PMI) showing a contraction in factory activity in May, some economists think the National Bank of Poland (NBP) will again slow the pace of rate hikes.

“Despite higher growth and inflation, we expect the NBP to slow the pace of tightening further to 50bp at its upcoming June 8 meeting,” Morgan Stanley analysts wrote in a note.

“Growth and inflation data continued to surprise to the upside against the NBP’s forecast but the underlying details revealed a deterioration in the growth quality mix and core inflation gaining pace at a slower rate.”

Of 20 analysts polled, 15 forecast a 75-basis-point hike, four expected 50 basis points and one saw a 100-basis-point increase.

(Reporting by Alan Charlish; Editing by Alison Williams)