Poland's central bank will raise the cost of credit at its next rate-setting meeting in September, Monetary Policy Council (MPC) member Ludwik Kotecki was quoted as saying on Friday, as he warned the country was heading for "textbook stagflation".
Worries about slowing growth meant the central bank raised rates less than expected in July and it has signalled that it is approaching the end of its tightening cycle, but with inflation at a 25-year high economists see further hikes as inevitable.
Asked in an interview with Dziennik Gazeta Prawna daily if the bank would raise rates in September Kotecki replied, "I think so."
Kotecki said that a technical recession of two consecutive quarters of contraction was possible, and that Poland was heading for "textbook stagflation".
"That means there will continue to be high inflation and slightly positive, close to zero GDP growth," he said.
Inflation in Poland hit 15.6% in June according to a flash estimate, and Kotecki warned it could increase further as a result of rising energy prices.
"At the latest at the beginning of the year, we will face very strong increases in electricity and gas prices, which may be underestimated in the inflation projection," he said "This would suggest that inflation in January may jump above 20%."
He said that he did not think inflation would fall to the 6% at the end of 2023 forecast in the central bank's most recent projections.
The Polish central bank targets inflation of 2.5% plus or minus one percentage point. In July it raised its main interest rate by 50 basis points to 6.50%.
