The NBP governor said the National Bank of Poland's NBP will continue its cycle of interest rate hikes until it makes sure inflation is going down permanently.
Adam Glapinski, a statement for the World Economic Forum in Davos and published on Monday by the NBP's Obserwator Finansowy said the Polish economy could be affected by unexpected global events in the near future and that the central bank would have to take such developments into account when making decisions.
Glapinski said that the Monetary Policy Council, the NBP's rate-setting body, embarked on a rate-hike cycle in October 2021, which he said would probably be continued in the coming months until inflation is permanently lowered. Glapinski said we want to bring inflation down to the target, but we want to calibrate the pace of monetary tightening so that we don't do excessive social and economic harm.
The NBP's official inflation target is 2.5 percent plus minus one percentage point, but the latest reading for April showed prices of goods and services increased by 12.4 percent compared to the previous year. The NBP's reference rate is now at 5.25 percent after a series of hikes.
Poland is well-positioned economically to meet any challenges, with economic sentiment still high despite inflation and a tense geopolitical situation, according to Glapinski.
The governor said Poland's GDP growth exceeded 8 percent year on year in the first quarter of 2022, while unemployment was very low and wages were rising at a double-digit pace.
Glapinski said that the strength of the economy is evidenced by the war behind our eastern border, because of the ability to maintain strong economic growth with record low unemployment.
On Sunday, the World Economic Forum, which started in Davos, Switzerland, is expected to focus on problems caused by the war in Ukraine, the Covid-19 Pandemic, climate change and economic crises.