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Polish Rate Increase More Likely in First Half, Bratkowski Says

February 28, 2012

Feb. 21 (Bloomberg) -- Poland’s central bank is becoming more likely to raise interest rates before July as the economy is set to grow more quickly this year than the government forecasts, monetary policy maker Andrzej Bratkowski said.

Gross domestic product may increase 3.5 percent this year, Bratkowski said in an interview yesterday in Warsaw. That compares with the government’s 2.5 percent estimate. The economy of Poland, the only European Union country to escape recession in 2009, expanded 4.3 percent last year as grants for the 27- member bloc’s poorer members spurred infrastructure investment and the weaker zloty helped exports.

“The question is less and less whether and more and more when to raise rates,” Bratkowski said “It’s getting more likely that a rate hike will be necessary in the first half of the year.”

While policy makers from the European Central Bank to Brazil have cut interest rates over recent months in an effort to stimulate growth, the Narodowy Bank Polski has left its benchmark seven-day interest rate at 4.5 percent since June. The bank raised borrowing costs by 1 percentage point in the first half of last year as inflation accelerated to a decade-high 5 percent, double the central bank’s target.

The zloty has strengthened 7.2 percent against the euro this year, the third-best performance of about 170 currencies tracked by Bloomberg. The currency, which dropped 11 percent in the second half of last year, was “undervalued” and is “returning to the correct level,” Jan Krzysztof Bielecki, who heads Prime Minister Donald Tusk’s council of economic advisers, said in an interview with Bloomberg last week.

Not ‘Fantastic’

The currency’s gains helped slow inflation to 4.1 percent in January from 4.6 percent the month before, the gauge remaining outside the central bank’s target range of between 1.5 percent and 2.5 percent for a 13th month. It’s “fairly unlikely” that inflation will return to the goal without rate increases, Bratkowski said.

“The January inflation figures weren’t fantastic,” Bratkowski said, noting that the data were in line with policy makers’ predictions that price growth would slow. “The zloty’s appreciation gives us more time to observe developments, but this state of affairs can’t continue for too long. With each month that goes by, there is less room to simply monitor the situation and more need to take a decision on interest rates.”

--Editors: Balazs Penz, David McQuaid

Dorota Bartyzel in Warsaw at


To contact the reporters on this story: Katya Andrusz at

To contact the editor responsible for this story: Balazs Penz at

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