Halina Wasilewska-Trenkner told Reuters in an interview on Monday she saw little chance of inflation easing below 4% this year and the MPC aimed to curb rising demand in a booming economy. “In my view there is no reason to wait with interest rate hikes. What we are observing now, when it comes to inflation, is a result of the fact that monetary policy was very accommodative a year, a year-and-half ago,” Wasilewska-Trenkner said. “It is very possible that a hike to 6% will be enough because it’s not about sharply limiting growth but about helping the economy balance itself.”

The National Bank of Poland’s main rate now stands at 5.75%. It has been raised seven times since last April when it stood at an all-time low of 4.0%. Wasilewska-Trenkner said the MPC was particularly watching global developments for any signs on how the US economy slowdown could impact the euro zone and as a result Poland. “Our addiction to incoming data is growing because the scenario of future events in the economy is distorted by what is happening in the world.” She said, however, that she could not rule out that the economy would need more rate increases after April since recent data signaled the economy remained strong and that it could grow at 6.1-6.2% in the Q1 of the year.

Wasilewska-Trenkner, a hawk on the 10-strong policy panel, also said the strong zloty was helping the council in its battle against inflation, boosted in recent months mainly by fuel and food and now by regulated and service prices. Rises in gas prices of 10-20%, demanded by the country’s gas monopoly and regulated by the energy watchdog, could push price growth much higher ahead. For March, the finance ministry forecasts inflation at 4.1% year-on-year, against February’s 4.2%. “The main concern is no longer fuel and food but regulated and services’ prices. What we are seeing now shows that inflationary pressure is growing. Although there are first signs that the rate of credit growth is easing,” she said. “We need to somewhat limit demand and there is only one way to discourage credits – through increasing their cost.” She also said Poland’s real interest rate, the level of the main rate and inflation, is very low. “We are raising rates, among others, to later have room for maneuver in case we wanted to cut them without the risk of a negative real rate.” (Reuters)