Polish finance chief says inflation forecasts were conservative

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Polish finance chief says inflation forecasts were conservative

According to Pawel Borys, head of the Polish Development Fund PFR, the central bank's inflation forecasts had been conservative and did not predict the rise in inflation, according to TV news channel TVN 24 on Wednesday.

Borys said that inflation will be with us for at least two to three years. He said that they hope that it will reach its maximum in the third quarter and will start falling next year.

Borys pointed out that inflation was at 5 percent until September. It seemed to be under control. He said that it went up in September when prices of food and gas went up.

He went on to say that economists had been wrong in their forecasts for the past two years due to a number of unpredictable events.

He added that interest rates must increase a bit.

Poland's reference interest rate is now at 4.5 percent, but most economists think the central bank will continue its rate-hike cycle and announce another hike on Thursday.

The PFR head said the first level where we can try to stabilise the rates is between 5.5 percent and 6 percent. If inflation keeps rising, we'll have to approach 7 percent, he said, adding that inflation was likely to peak at 13 -- 14 percent in the latter scenario.