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Polish interest rates should rise further

Poland’s Monetary Policy Council (MPC) should raise interest rates further and a hike at an upcoming April meeting may be needed, MPC member Dariusz Filar was quoted as saying on Thursday.

Filar, seen as a hawk on the 10-strong panel, said he believes real interest rates, adjusted for inflation, should stabilize at about 2% as long as fast economic expansion continues. “If trends in the economy remain unchanged ... then another interest rate hike will be needed,” Filar told daily Parkiet. “Real interest rates in a fast growing economy, and this is what we have now, should not diverge too much from 2%... still the real rate is below 2%.” During its current tightening campaign the council raised the key interest rate to 5.75% in March, from a record low of 4% in April 2007 in order to fight inflation and wage pressures.

Polish inflation eased to 4.1% in March from 4.2% in February, but remained well above the 2.3% seen in April 2007. (Reuters)