The Monetary Policy Council yesterday raised interest rates as a way to curb inflation as well as “to continue the cycle of tightening fiscal policy,” head of Poland’s central bank, Marek Belka announced.

The report released by the Monetary Policy Council to accompany the hike in the base rate by a quarter of a percentage point did state, however, that the “risk of a slowdown of economic activity in Poland has decreased.”

“The effects of high fiscal imbalances in several developed economies as well as strong monetary expansion by major central banks continue to add uncertainty about the global economic outlook,” the report writes, adding that current unrest in North Africa and the disaster in Japan have also taken their toll on global markets.

“Due to the disaster in Japan, the volatility of financial assets and commodity prices has increased in the global markets. A surge in commodity prices has contributed to the rise in inflation across the world,” the report explains.

All rates at the National Bank of Poland have gone up by 0.25 percentage points, and is in force from today, Wednesday. The reference rate is now set at 4 percent. (jb)

Source: PAP/NBP