RYTRO, Poland: There is little chance that consumer inflation in Poland will quickly return to the central bank’s 2.5 percent target, a Monetary Policy Council member said yesterday, leaving scope for further monetary easing.
Jerzy Hausner, one of the central bank’s 10 rate-setters, also said that economic growth could accelerate to about three percent late next year, but there was also the risk of a more protracted slowdown.
Earlier this week data showed Poland’s economy, after two decades of uninterrupted growth, had almost came to a halt and barely dodged recession.
“I can only repeat that the Council’s worry is that inflation is below our target,” Hausner said.
“Even if inflation will rise, and I think it could ... this return to target will not be fast. This is an argument for reducing interest rates.”
Poland’s inflation has been declining for several months and stood at 0.8 percent year-on-year in April, well below the central bank’s 2.5 percent target.
The central bank has reduced interest rates by a total of 175 basis points since November, though its policymakers have come under fire from government officials and markets alike for being too cautious and too slow with monetary easing.
The central bank last cut rates in early May by 25 basis points, bringing its key rate to an all-time low of 3.0 percent. “Saying and expecting that the monetary policy council will immediately secure Poland with economic growth is unjustified,” Hausner said.
Reuters
