NBP hikes again as inflation in Poland keeps rising

The National Bank of Poland (NBP) hiked the policy rate by 75bps at yesterday’s meeting, in line with both our and the consensus view. This brought the main interest rate to 6%. The move took place against the backdrop of ever-higher inflation, which picked up to 13.9% in May.

What you will learn:

• Notably, both external and domestic factors have played a role in the ongoing surge in inflation.
• This means that even if the shocks boosting food and energy prices dissipate, strong underlying price pressures will prevent a quick return of the headline inflation to the NBP’s target range.
• As demand remains robust, supported not least by loose fiscal policy and strong nominal wage growth, we expect monetary policy tightening to continue, with the terminal rate now seen at 7.5%, up from 6.5% previously.