Poland hikes refinancing rate along interest rate normalisation wave in the region

A week before the monetary board meeting at the Romanian National Bank (BNR), the Polish central bank hiked the refinancing rate in a largely expected move.

The Monetary Policy Committee of the National Bank of Poland (NBP) raised the benchmark interest rate by 50 basis points to 2.25%, in line with analysts' estimates, Economica.net reported.

Nevertheless, this creates the context and terms for comparison for another rate hike BNR will probably decide at its January 10 monetary board meeting. BNR was at par with Poland in terms of monetary policy normalisation before the NBP announced its January 4 rate hike, in the context of pretty similar inflation profiles.

Poland's Consumer Price Index was at 7.8% in November, and NBP Governor Adam Glapinski has said the central bank now expects it to peak at 8.3% in June. Romania's headline inflation was also 7.8% YoY in November, and BNR said in November that it expected the inflation to rise up to 8.6% YoY in June 2022 as the temporary energy bill subsidies are phased out.

Romania's adjusted CORE inflation, showing the long-term dynamics of prices (linked to the monetary policy), increased to 4% YoY in October (not far from that in Poland) from 3.6% YoY in September.

Romania's refinancing rate is 1.75% at this moment, 50 bp below that in Poland before the January 4 50 bp rate hike.

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