Poland raises interest rates, seeking to tame inflation

WARSAW, Poland (AP) - Poland's central bank unexpectedly raised interest rates on Wednesday as the central European nation faces an accelerating inflation rate that is currently the highest in the European Union.

The annual inflation rate registered at 5.8% in September, the highest in two decades, while economists predict that it is likely to accelerate even further in the coming months.

The National Bank of Poland, or NBP, raised the reference rate by 40 basis points from 0.1% to 0.5%. The decision came as a surprise. Many experts had expected that interest rates wouldn't go up until next year because many of the reasons for the rising inflation - including a surge in gas prices - are related to temporary shocks beyond the ability of the central bank to influence.

However, the NBP governor Adam Glapinski said that monetary tightening may be needed to prevent inflation from consolidating at an elevated level when the shocks pass.

The historically low interest rates in Poland, like in many other countries, are one factor that have led to skyrocketing prices of real estate.