Brussels (Brussels Morning) The National Bank of Poland (NBP) upped interest rates last week for the first time in nine years to curb inflation.
Poland joined Hungary, Romania and the Czech Republic in raising interest rates, Romania having made the move one day before Poland, DW reports.
Hungary and the Czech Republic started upping interest rates in June, with the Czech central bank raising its key interest rate by 75 basis points and announcing more rate hikes.
Some central banks are looking to curb inflation by raising their key interest rates while some of their counterparts are keeping their rates at record-low levels to maintain economic growth.
In general, wealthier countries have been delaying decisions on the issue. Brazil and Russia, meanwhile, already raised their key interest rates several times this year.
S&P Global credit rating agency’s lead economist, Tatiana Lysenko, has pointed out that inflation has grown fast in economies that were quick to rebound between the third quarter of 2020 and the second quarter of this year. She cited Brazil, Hungary, Poland and Russia as examples.
Inflation highest in Central Europe
Inflation rates in Central Europe are among the highest in the EU. In the case of Poland, it reached 5.8% in September, the highest level in the last 20 years and significantly above the NBP target of 2.5%.
The Dutch ING Bank, noting that the price of natural gas for households increased 12.4%, suggested that the NBP had underestimated the rise in energy prices. This year alone, benchmark gas prices in the EU have increased more than 300%.
ING Bank pointed to how global supply chain disruptions have affected inflation and attributed rising inflationary pressure to the labour market conditions and to growing domestic demand.
According to a UN index, global food prices are close to a 10-year high. The NBP cautioned that “the rise in global prices for both energy and agricultural commodities seen in recent months may still increase price pressures in the coming quarters.”