Interest rates, inflation – January 2022. Conference of the President of the National Bank of Poland, Adam Glapiński

Inflation in the first quarter of 2022 will temporarily decrease thanks to the anti-inflation shield. In the second quarter, it will rise again to a maximum in June, in the middle of the year, above 8 percent – said the president of the National Bank of Poland, Adam Glapiński, during the Wednesday press conference. As he stated, taking into account the current forecasts of the development of the situation, he will urge the Monetary Policy Council to raise interest rates one more time, by at least 50 basis points.


NBP president on the peak of inflation in Poland

– We predict that in the first quarter of this year, inflation will temporarily decrease due to the introduction of the anti-inflationary shield by the government. Inflation will pick up again in the second quarter, reaching a peak around June mid-year, somewhere above eight percent. (…) After that, inflation should gradually decrease. Nevertheless, the average inflation this year will be significantly above the inflation target of the National Bank of Poland (2.5 percent +/- 1 percent – ed.). It is only in 2023 that inflation will be at a decent level, significantly lower – said Glapiński.

– The peak will be somewhere in the middle of the year, then (inflation) it will decrease – said the NBP governor.

He added that the predictions do not “take into account the prospects for a pandemic developing or disappearing”. – We evaluate the situation with the existing parameters. And this scenario is moderately optimistic that the pandemic is slowly coming to an end, that international transport prices are falling, and that gas and oil prices are stabilizing. The only thing that will surely increase will be electricity prices. Over time, these high prices will be the benchmark for inflation, he said.

Inflation in NovemberPAP / Maciej Zieliński

Glapiński on an increase in interest rates

The NBP president also stated that “Poland’s situation is relatively good compared to other countries”. – We are growing faster than other countries. We have already rebuilt our GDP from what was before the pandemic. We are moving forward. We are catching up, he said.

– We are growing faster than others, GDP is higher, there is practically no unemployment in Poland. These good trends must be maintained. This whole cycle of four interest rate increases is not intended to lower the current inflation, but the demand one, which may arise in a few quarters – explained the NBP governor.

– Another hike (of interest rates – ed.), Which we had yesterday (Tuesday), meant that since October last year we raised interest rates by more than two percentage points. It is very fast and very important. These are decisive, consistent changes, but prudent at the same time – stated the head of the central bank.

He added that he did not want to “overdose the drug to cause unemployment.”

NBP president on possible further interest rate increases

– Will we continue to raise interest rates? I don’t know how the Monetary Policy Council will deal with it. We will see what it will be like, he said.

He also added: – It seems to me personally, and this opinion is shared by the majority of the members of the current Council, that an interest rate of up to 3 percent will not cause any negative effects in the economy that should be feared. Unfortunately, any increase in interest rates slows down economic growth. Taking into account the current forecast, I would urge the Monetary Policy Council to raise interest rates one more time, by at least 50 basis points.

-I will persuade you to 50 points. base, but what the MPC will do I do not know – said Adam Glapiński.

The head of the NBP also said: – It is good if you already enter a cycle, for example 50 basis points (bp), then you should maintain it. A switch to 25bp would be a signal that we are ending the cycle, and a switch to a higher number of points would be a signal that we want to tighten faster. 50bp is a bit of an extraordinary rhythm resulting from the crisis, but let’s stick to it. It can be less often, and maybe this is the end of the cycle. The MPC has no dogmatic views on interest rates – said Glapiński.

Interest rates in Poland

MPC during Tuesday’s meeting, for the fourth time in a row, decided to raise interest rates.

NBP interest rates after Tuesday’s decision:

– reference rate 2.25% on an annual basis; – lombard rate 2.75% on an annual basis; – 1.75% deposit rate on an annual basis; – rediscount rate 2.30% on an annual basis; – discount rate of bills of exchange 2.35% on an annual basis.

After the increase, the reference rate is at its highest level since August 2014.

PAP / Adam Ziemienowicz


Main photo source: PAP / Paweł Supernak

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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