CEE ECONOMY Polish inflation spikes sharply above 8%, boosting rate hike case

Jan 7 (Reuters) - Polish headline inflation spiked more than expected in December, rising to a rate of 8.6% year-on-year, according to preliminary statistics office data, and backing views the central bank was not yet done after four straight interest rate increases.

The National Bank of Poland (NBP) raised its main interest rate by 50 basis points to 2.25% (PLINTR=ECI) on Tuesday as it grapples with a surge in inflation to a two-decade high.

Governor Adam Glapinski said after that most members of bank's Monetary Policy Council (MPC) think the main interest rate could rise to 3.0% without negative effects. read more

Poland shifted into monetary policy tightening mode later than the Czech Republic and Hungary but has moved quickly in lifting rates from near zero.

Polish markets are pricing in chances of rates rising to around 4% in the first half of the year.

Analysts, though, say the outlook still faced uncertainties, such as the overall impact on inflation coming from government measures like tax cuts on key essentials like petrol aimed at softening the blow to consumers.

But Friday's data, which showed inflation rising from 7.8% in November, fed into that view the central bank would follow this week's interest rate hike with another large increase at its next sitting.

"Inflation is very high and we think the MPC may deliver another 50 basis point hike in February," said Adam Antoniak, senior economist at ING.

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