Poland raises rates for third consecutive time
Poland's central bank delivered a 25-basis- points rise in interest rates Wednesday as part of an effort to curb inflationary pressures in Central Europe's biggest economy. ( dpa )
The increase in borrowing costs to 5.75 per cent was the third time in as many months that the Warsaw monetary authorities have raised the cost of money in the country.
Wednesday's increase was in line with analysts' forecasts and comes in the wake of Poland's inflation rate remaining above the central bank's annual target of between 1.5 and 3.5 per cent. Inflation hit 4.2 per cent in February.
"We expect the reference rate to rise to 6.25 per cent by June," wrote Raffaela Tenconi, a Dresdner Kleinwort economist in a note to clients.
The rate rise "further demonstrates that the National Bank of Poland (NBP) remains committed to fighting inflation" said Danske Bank chief analyst Lars Christensen although he expects the bank to now slow the pace of rate hikes.
But he added: "It is notable that that there are no signs that the NBP is softening its stance on monetary policy despite the ongoing global credit crisis and the expectation that Polish growth should start to slow during 2008."
Apart from signs of a further tightening in Poland's labour market, industrial production in the nation jumped sharply in February with consumer confidence high and wage growth is at an eight-year high. Retail sales surged 24 per cent, data showed.