Central bank chief: I will be recommending further raising of interest rates

The head of Poland's central bank said that "Poland's situation is relatively good compared to other countries". "We're growing faster than other countries. We have reached the GDP from before the pandemic. We're moving forward. We're making up for losses," he added.

"We're growing faster than others, the GDP is higher, and there's practically no unemployment in Poland. We need to sustain this tendency. This whole cycle of four increases of interest rates is not meant to curb current inflation, but rather demand-pull inflation which may emerge in a few quarters," NPB chief said.

"Another increase (of interest rates - edit.) that we saw yesterday (on Tuesday, Jan. 4 - edit.) means that since October 2021, we have increased the interest rates by more than 2 percentage points. It's very dynamic and very important. These are decisive, consistent, and yet cautious changes," said the head of the central bank.

Glapiński added that he wants to avoid "causing unemployment through overdosing the medicine".

"Will we raise interest rates further? I don't know, how the Monetary Policy Council will relate to this. We shall see what happens," he said.

He added: "Personally, I think, and most members of current Council agree, that interest rates up to 3% shouldn't have any negative consequences for the economy, nothing we should be concerned about. Unfortunately, each interest rates increase causes economic slowdown. Given latest forecasts, I would recommend the Monetary Policy Council to once more increase the interest rates, by at least 50 basis points".

"I will be recommending 50 basis points, but what the RPP opts for, I don't know," Adam Glapiński said.

The NBP chief also said that "once you enter a cycle, for instance of 50 basis points (bp), it's good to sustain it". "Switching to 25 bp would mean we are ending the cycle, whereas switching to more points would signal our intention to tighten faster. 50 bp is a slightly unusual rhytm resulting from the crisis, but let's stick to it. The RPP does not have a dogmatic approach towards interest rates," Glapiński said.

Poland's Monetary Policy Council (RPP) decided to increase the NBP reference rate by 0.50 percentage points, i.e. to 2.25%.

At the same time, the Council set the remaining NBP interest rates at the following levels:

- lombard rate at 2.75%;

- deposit rate at 1.75%;

- rediscount rate at 2.30%;

- discount rate at 2.35%.