Pawel Florkiewicz & Alan Charlish

WARSAW, (Reuters) – Poland is likely to see a rate increase of 50 basis points in January. However, that won’t be the end for policy tightening. Lukasz Hartt, central banker, said Monday that Poland would experience a hike of 50basis points, but a dovish Monetary Policy Council member (MPC), warned that hiking too often could cause slow growth.

Inflation hitting 7.8% in November, which is the highest rate in nearly two decades. Markets are expecting the Polish central banking to keep raising rates. But, members of the MPC have divergent views on how fast and deep they should tighten.

“We increased rates by 50 basis point in December. Hardt, one the most hawkish MPC members, stated that a repeat is very likely. This would mean a 50 basis point increase in January.

Kamil Zubelewicz (hawk) said Monday in Interia.pl comments that the main rate, which is currently 1.75%, “is currently too low.”

He said: “If inflation was accepted at an elevated level of 3.5% per year, then the rates must be increased to 4.5%. Even this doesn’t guarantee rapid results.

According to him, a 50 basis-point increase would be too big. I believe it’s better to increase the rate in small, decisive steps. Then close the process before February. However, I am yet to see these definitive steps.

According to Eryk Lon, Eryk, who is a dovish rate-setter said that an “extreme” increase would be detrimental to the economy. But, it’s possible he might support a slight rise in credit rates.

Lon said that “I consider different types of situations, including those where circumstances arise that justify my support for an extremely small rate rise.”

He added that an increase in COVID-19-related infections could be a reason to keep rates stable in January.

Zubelewicz stated that double-digit inflation was impossible to rule out. Interia.pl quoted him as saying, “I don’t want to scare anybody, of course. But we could have inflation exceeding 10%.”