Hike rates

Poland to raise rates in September, says central banker Kotecki

WARSAW, July 15 (Reuters) – Poland’s central bank will raise the cost of credit at its next rate-setting meeting in September, Monetary Policy Council (MPC) member Ludwik Kotecki said on Friday as he warned that the country was heading for “textbook stagflation”.

Concerns about slowing growth led the central bank to raise rates less than expected in July and it signaled it was nearing the end of its tightening cycle, but with inflation at a 25-year high , economists consider that further increases are inevitable.

When asked in an interview with the daily Dziennik Gazeta Prawna whether the bank would raise rates in September, Kotecki replied, “I think so.”

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Kotecki said a technical recession of two consecutive quarters of contraction was possible and Poland was heading for “classic stagflation”.

“That means there will continue to be high inflation and slightly positive GDP growth, close to zero,” he said.

Inflation in Poland reached 15.6% in June according to a flash estimate, and Kotecki warned that it could rise further due to rising energy prices.

“At the latest at the beginning of the year, we will face very large increases in electricity and gas prices, which could be underestimated in the inflation projection,” he said. . “That would suggest that inflation in January could jump above 20%.”

He said he did not believe inflation would fall to the 6% by the end of 2023 projected in the central bank’s latest projections.

The Polish central bank is targeting inflation of 2.5% plus or minus one percentage point. In July, it raised its key rate by 50 basis points to 6.50%.

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Reporting by Alan Charlish and Pawel Florkiewicz

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