‘Experimenting’ With Rate Hike Rejected by Polish Central Banker
Poland should shrug off inflationary fears and keep its key interest rate near zero until its economy fully bounces back, central banker Jerzy Zyzynski said.
Zyzynski, an ally of Governor Adam Glapinski who’s advocating unchanged rates, sought to erase any impression from last month that he was siding with a minority of board members urging for a symbolic hike to 0.25%.
“I’m not going to experiment with any hikes,” he said in an interview. “This year and the beginning of 2022 is a serious test for our economy. The wait-and-see approach, then, is all I can see until the economy achieves pre-pandemic levels.”
With consumer-price growth at the European Union’s second-highest level, expectations were rising in Poland that it would follow nations such as Hungary that -- alarmed by rising inflation -- raised interest rates. But Glapinski nixed such noise as he doubled down on his pledge to keep borrowing costs at a record low and dismissed inflation as temporary.
“I’m more worried about that noise leading to higher inflation expectations than about inflation,” Zyzynski said, echoing the governor’s opinion that monetary policy isn’t about “any symbolic moves.”
Earlier in June, Poland kept benchmark borrowing costs at 0.1%, unchanged for more than a year. Glapinski also reiterated that “a significant majority” of policy makers supports the view that price pressure is temporary and beyond their control.
Picking economic growth over rising inflation means no action on rates for Zyzynski, whose term ends in March, as he won’t be around for “any chance to support” the first rate increase since 2011.
He’s also certain that all inflation outlooks this year will only highlight the “transitory nature” of an economic environment after the pandemic, thus forcing policy makers to withhold from taking action.
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