November 15, 2019 / 10:19 AM / a month ago

Polish central banker Ancyparowicz expects stable rates until 2022

WARSAW, Nov 15 (Reuters) - Polish interest rates are likely to remain on hold until 2022, but if data pointed to a serious slowdown a rate cut would be a possibility, central banker Grazyna Ancyparowicz told Reuters.

Poland’s benchmark interest rate has been at a record low of 1.5% since 2015, and the central bank’s governor, Adam Glapinski, has repeatedly said he expects no change in rates until 2022 ,when the current Monetary Policy council term ends.

“The newest inflation projection supports the idea that interest rates could remain unchanged until the end of the Monetary Policy Council’s term. I am almost certain of that,” Ancyparowicz said.

“If the worst-case scenario of a sudden breakdown in this calm balanced growth came true... it would be necessary to lower rates rather than to raise them,” she added.

Earlier this month the central bank presented its latest forecasts, which suggest inflation will rise in early 2020, then moved back towards the middle of the bank’s target range of 2.5%. plus or minus one percentage point.

Glapinski said the forecast confirmed his view that rates should remain on hold, but in the event of a change they would be a cut.

“It seems to me that the governor is right, here - if anything it would be a cut, but that is rather unlikely because something bad would have to happen with our economic growth,” she said.

In Ancyparowicz’s opinion, there is no indication that inflation would exceed the target range for long time. Even if there are some short-lived price increases, inflation will still return to target in the middle of next year.


Ancyparowicz also expressed concern about fiscal policy in central Europe’s largest economy, as signals emerge that the balanced budget for 2020 promised by the ruling Law and Justice (PiS) before October’s elections is increasingly unlikely to materialise.

PiS promised a raft of new spending measures before the elections, but it expected to achieve a balanced budget in 2020 because of one-off factors, such as income generated by a reform of the pension system.

“I think that at the moment it is a dangerous area ... If there is a weakening of economic conditions, it may turn out that all these budget projections need to be reviewed,” she said.

“A fiscal policy that is oriented towards short-term goals rather than long-term sustainability can create very serious threats to sustainable growth in the future.” (Reporting by Pawel Florkiewicz and Alan Charlish; editing by Larry King)

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