A man looks at meat products at a market in Gdynia, Poland. January 31, 2019. REUTERS / Matej Leskovsek

WARSAW, Jan.4 (Reuters) – Poland’s central bank hiked interest rates on Tuesday and suggested further tightening was on the horizon as the country grapples with the fastest price growth since more than two decades.

The National Bank of Poland raised the key rate by 50 basis points to 2.25%, the fourth hike in as many months. The decision was in line with analysts’ estimates.

“Council decisions in the coming months will continue to aim to reduce inflation to a level consistent with the NBP’s medium-term inflation target,” the Monetary Policy Council (MPC) said in a statement.

As in other countries around the world, including central and eastern Europe, labor shortages, rapid wage growth, supply chain disruptions and rising energy costs have drives up consumer prices in Poland.

The Polish central bank is targeting inflation of 2.5% plus or minus a percentage point.

The governor of the National Bank of Poland (NBP), Adam Glapinski, who has been criticized by some economists for being slow to react, reportedly said in December that inflation in 2022 would be higher than previously thought, with a average of 7.6%, mainly due to energy. prices. Read more

Poland’s consumer price index was 7.8% in November, according to data from the bureau of statistics, and Glapinski said the central bank now expects a peak of 8.3% in June.

“This large deviation of inflation from the central bank’s 2.5% target, even if driven by factors beyond the MPC’s control, will prompt the central bank to keep raising rates. of interest in the coming months, “said Liam Peach, Emerging Europe Economist at Capital. Economy.

Analysts polled by Reuters expect the main rate to rise to 3.5% by the end of 2022.

“There remains a risk of inflation exceeding the NBP’s inflation target in the transmission horizon of monetary policy,” the bank said in its press release.

The Polish zloty was 0.23% firmer that day at 1602 GMT.

Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz and Anna Wlodarczak-Semczuk; Editing by Frank Jack Daniel

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