Poland’s central bank raised its key interest rate unexpectedly on Wednesday, citing higher inflationary pressures in the coming quarters.
The Monetary Policy Council increased the reference rate by 40 basis points to 0.50 percent, the Narodowy Bank Polski said. Economists had expected the bank to leave the rate unchanged.
Policymakers also decided to hike the required reserve ratio from 0.5 percent to 2.0 percent.
Rising prices of energy and agricultural commodities may pusch inflation higher in the coming quarters, the bank said.
“Amidst probable further economic recovery and favorable labor market conditions, inflation may remain elevated longer than hitherto expected,” the NBP said.
“Such a situation would generate a risk of inflation staying above inflation target in the medium term.”
Capital Economics said there remains a lot of uncertainty regarding the stance of the dovish members of the council. The firm expects the policy rate to touch 2.00 percent next year.