Poland’s central bank raises reference interest rate by 50 bps

Poland’s Monetary Policy Council (RPP) increased the reference interest rate by 50 basis points to 1.75 percent on Wednesday.

The National Bank of Poland's Lombard rate has been raised from 1.75 percent to 2.25 percent, the rediscount rate from 1.30 percent to 1.80 percent, and the discount rate from 1.35 percent to 1.85 percent.

The raise was in line with the market's expectations.

At the same time, the deposit rate has been raised from 0.75 percent to 1.25 percent.

It is the third interest rate hike in a row after a 40 bps increase in October and a 75 bps follow-up in November, which economists see as a reaction to rising inflation.

Before December's rate rise, Poland's RPP cut rates by 140 bps in three moves back in the first half of 2020 as the coronavirus pandemic struck the economy. The reference rate had previously been frozen at the 1.5 percent mark since March 2015.