Source: Wall Street
Poland's central bank raised interest rates by 40 basis points, raising its main interest rate from 0.1 per cent to 0.5 per cent, while the market had expected it to stay put. This is the first time since 2012 that interest rates have been raised to deal with non-temporary inflation, which in turn will prompt neighboring Hungary and the Czech Republic to tighten monetary policy in the same way.
Affected by global inflation, emerging markets were the first to open the road to austerity: Brazil, Mexico and Colombia raised interest rates one after another.
Developed countries followed suit, and Norway fired the first shot to raise interest rates. On October 6th, the central bank of new Zealand raised its benchmark interest rate from 0.25% to 0.5%, and began to tighten monetary policy.
Just a few hours later, the Polish central bank unexpectedly raised interest rates by 40 basis points, raising its main interest rate from 0.1 per cent to 0.5 per cent, while the market had expected it to stay put. This is the first time since 2012 that interest rates have been raised to deal with non-temporary inflation, which in turn will prompt neighboring Hungary and the Czech Republic to tighten monetary policy in the same way.
None of the 29 economists surveyed by Bloomberg expects Poland's reference rate to rise to 0.5%.
The move comes a day after Adam Glapinski, the governor of Poland's central bank, hinted that policymakers were about to raise borrowing costs from historic lows, but was not sure. At the same time, he said Poland would seek to buy 100 tons of gold in 2022 and would continue its bond-buying program.
"unlike the Fed, at least Poland has the courage to deal with inflation that no longer seems to be temporary, but one that is likely to remain high for longer than expected," ZeroHedge said in response to the Polish announcement.
"inflation is likely to remain high for longer than so far expected, given the possibility of a further economic recovery and favourable labour market conditions."
Although the impact of some of the supply-side factors of the current rise in inflation will subside next year, the global energy and agricultural products observed in recent monthsPrice increases may still drive price growth in the coming quarters. "
HSBC said the interest rate hike in Poland opened the door for the Polish zlo to rise to 4.4 euros.
