Poland lifts reference rate to 4% amid growing inflation pressures

By Susanna Moon

Chicago, April 6 - The National Bank of Poland's Monetary Council said it continued tightening the monetary policy to stem the risk of inflation running above the target and raised the bank's reference rate by 25 basis points to 4% at its meeting held April 4 and April 5.

Recent data show diminished risk of an economic slowdown in Poland, and the council believes that the improving economy and job growth may put pressure on wages and inflation, according to a bank press release.

The bank also noted the rise in inflation expectations and commodity price hikes across the world, which have not been offset by changes in the zloty exchange rate.

The Consumer Price Index inflation remained at 3.6% in February, but core inflation rose.

The bank also cited data that confirm the recovery of the global economy at the beginning of 2011, with strength in the United States and a jump in Germany, Poland's main trading partner.

Most developed countries still face high unemployment, however, and consumers and companies are continuing to adjust their balance sheets. In response to growing inflationary pressures, major emerging economies and some small open developed economies have been tightening monetary policy, the bank said.

Uncertainty about the global economic outlook also has been heightened by the recent events in Japan and the increased tensions in Northern Africa and the Middle East.

The council also decided to raise the Lombard rate by 25 bps to 5½%.

The bank members considered raising the bank's reference rate by 25 bps at its meeting on March 2, but the motion did not pass, according to minutes of that meeting.

The council last raised the rate to 3¾% from 3½% at its meeting on Jan. 19, the first time the rate has been increased since June 2009.

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