Borrowers likely to be affected as Poland ups interest rates

"In order to decrease the inflation to NBP target in the medium term, the Council decided to increase NBP interest rates,"

"Inflation in Poland, according to the Statistics Poland flash estimate for September 2021, increased to 5.8% in annual terms, and in monthly terms it amounted to 0.6%," Monetary Policy Council said in a press release.

"The elevated inflation resulted, to a great extent, from factors beyond the control of domestic monetary policy, such as higher than a year ago global prices of energy and agricultural commodities, earlier increase in electricity prices and in waste disposal charges, as well as disruptions in global supply chains and international transport. The ongoing economic recovery, including rising household income, has also added to the price growth," we read in the Wednesday's statement.

"Even though the impact of some supply-side factors currently increasing inflation will fade next year, the rise in global prices of both energy and agricultural commodities observed in recent months may still increase price growth in the coming quarters. Amidst probable further economic recovery and favourable labour market conditions, inflation may remain elevated longer than hitherto expected," the Council said.

"Such a situation would generate a risk of inflation staying above inflation target in the medium term. In order to decrease the inflation to NBP target in the medium term, the Council decided to increase NBP interest rates," we read.

The Monetary Policy Council has set the NBP interest rates at the following levels:

reference rate at 0.50% on an annual basis;

lombard rate at 1.00% on an annual basis;

deposit rate at 0.00% on an annual basis;

rediscount rate at 0.51% on an annual basis;

discount rate on bills of exchange at 0.52% on an annual basis.

Moreover, the Council decided to increase the required reserve ratio from 0.5% to 2.0%. 

The Monetary Policy Council also informed the resolution would enter into force on 7 October 2021.

READ THE FULL PRESS RELEASE FROM THE MONETARY POLICY MEETING HELD ON OCTOBER 6, 2021