Polish interest rates should stay at record low through 2021: central banker Lon

WARSAW (Reuters) - Poland should keep its key interest rate at a record low 0.1% and raising rates even next year would be too risky, central banker Eryk Lon wrote in an article published on Monday.

Poland’s central bank has cut rates three times since the outbreak of the coronavirus in the country in March, slashing the cost of borrowing by a total of 140 basis points.

Lon is considered to be the most dovish member on the central bank’s 10-member Monetary Policy Council.

“I am convinced that stabilizing the level of interest rates at the current very low level would be a good strategy in Polish monetary policy,” Lon wrote in the article for the website of Catholic radio station Radio Maryja.

“This would strengthen the belief among participants in the economy that our central bank is trying to do everything possible so as not to harm the wave of economic recovery that we are currently seeing.”

Lon said that he believed raising rates in the second half of 2020 or in 2021 would be “too risky”.

Poland’s finance ministry expects the economy to shrink by around 4% in 2020 due to the impact of the coronavirus.

Reporting by Pawel Florkiewicz and Alan Charlish; Editing by Susan Fenton