The Polish central bank is intensifying its defense against rising inflation.

The Central Bank Council in Warsaw raised the key interest rate by 0.5 percentage points to 2.25 percent at its meeting on Tuesday, which was brought forward by one week.

All other interest rates were also raised by half a point with effect from Wednesday.

The majority of economists surveyed by agencies had previously expected an increase of this magnitude.

The inflation rate in Poland jumped to 7.8 percent year-on-year in November, 1.1 percent more than in the previous month.

The increase underpinned expectations of an increase in interest rates in the market, although Warsaw's central bankers were more hesitant than their counterparts in the Czech Republic and Hungary to adopt a tough monetary policy course.

Andreas Mihm

Business correspondent for Austria, East-Central and Southeastern Europe and Turkey based in Vienna.

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When they raised interest rates in the summer, the rate in Poland stayed at 0.1 percent for a long time. It has now been increased to 2.4 percent in Hungary and even to 3.75 percent in the Czech Republic. Further upward adjustments are expected. The result is a soaring Czech crown. On Tuesday, the currency was quoted at rates around 24.74 kroner per euro, more firmly than it has been since 2012. The Hungarian forint has also been able to stabilize significantly again recently, with exchange rates around 264 forints to the euro. The same applies to the zloty, which, following the announcement of the expected rise in interest rates, was quoted a little higher at around 4.56 zloty per euro. Both currencies were, however, already significantly stronger in the past year.

Poland, the Czech Republic, Hungary and Romania belong to the EU, but are not members of the euro area and - unlike Croatia and Bulgaria - do not want to introduce the euro for the foreseeable future either.

Further economic recovery

December data published on Monday for the purchasing managers' index in the three countries indicated a further recovery in economic activity.

However, analysts also pointed to the resulting growing inflationary pressure.

New inflation figures are due to be published in Poland on Friday.

"The results so far have regularly surprised upwards," warned Alior Bank. The effects of monetary tightening on the zloty were also very moderate.

Before the meeting of the Polish central bank, Deutsche Bank had expected an "aggressive" increase of 1 percentage point.

"In any case and regardless of today's decision, we assume that further tightening will follow and see the key interest rate at 4.0 percent at the beginning of the third quarter".

Most analysts then see the key interest rate at 3 percent.