WARSAW: Rising wage demands and energy costs in Poland may push inflation above the central bank's target range in 2020, making a rate-hike proposal possible, a member of the bank's Monetary Policy Council (MPC) told state news agency PAP.
Poland's benchmark interest rate has been at a record low of 1.5 percent since March 2015, and with inflation staying well below the target rate of 2.5 percent plus or minus 1 percentage point, the MPC has had little incentive to raise rates.
However, inflation could go above 3.5 percent in mid-2020, Jerzy Kropiwnicki said in an interview published on Tuesday
"In 2019 the CPI path will mainly depend on how the government solves the problem of teachers' strikes," Kropiwnicki said.
Teachers in Poland vowed on Tuesday to continue a strike which is now in its 16th day, demanding a monthly salary increase of 1,000 zlotys ($262).
"If a spiral of wage demands is triggered, we will see inflation rising close to the upper limit of the inflation target, possibly at the end of 2019," Kropiwnicki said.
In March, the central bank said in its official projection inflation would remain within its target range in the next three years, reaching a maximum of 2.7 percent in 2020.
The MPC member added that rising energy prices and high oil prices would contribute to rising inflation, but said recent government measures to boost social spending and cut taxes would not have a major effect.
In Kropiwnicki's opinion, gross domestic product (GDP) growth will be higher than the March projections, reaching 4.2 percent in 2019 and 4.3-4.5 percent in 2020.
In its official projection in March the central bank forecast GDP growth of 4.0 percent in 2019, 3.7 percent in 2020, and 3.5 percent in 2021.
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