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Zielinska Says Polish Rate Increases Haven’t Taken Full Effect

April 16, 2012

Polish central banker Anna Zielinska-Glebocka comments on the outlook for inflation and interest rates. She spoke in an interview in Warsaw on April 14.

On inflation:

“The March inflation figure wasn’t a surprise to me. It was in line with our forecast and mainly resulted from the statistical base effect of high inflation a year ago. From the policy standpoint, the data are neutral and won’t have any impact on rate decisions.”

On the economy:

“The most important information for us will be industrial output and construction, along with wages and jobs data. Taken together, they will allow us to make a rough estimate of first- quarter GDP growth and its main components.

‘‘Core inflation and the inflation expectations survey will also be significant. So one can say that when it comes to the decision on when to tighten monetary policy, a lot depends on the next week.

‘‘Since the Monetary Policy Council doesn’t base its decisions on any single indicator, there’s no reason to assume it will wait until the end of May for the official release of first-quarter GDP. The data we’ll be getting over the next few days should be enough for us to make a preliminary judgment on the pace and structure of economic growth.’’

On monetary policy:

‘‘Nobody on the Council wants to be unreasonable. We realize that the price growth we’ve been dealing with for past year is sticky, but that it is also supply-driven, which means we have to look at it in a different way. In addition, last year’s interest-rate increases haven’t had time to take full effect. We’ve refrained from rate increases until now due to the external situation. Our decision not to react was well- considered.

‘‘Personally, I’d expected a much quicker fall in the inflation rate. Instead, it’s stabilized at an elevated level. You can’t cut interest rates under such conditions.

‘‘It’s clear we’re facing a very tough dilemma: is it time to use our policy tools to subdue this stubborn price growth? And how effective would that be, given that inflation is being driven by supply? On the other hand, we have to keep in mind that real interest rates in Poland are rather low.

‘‘Today I wouldn’t venture to say which arguments will prevail at the next rate meeting. Of course, one has to consider the central bank’s reputation. Credibility is based on well- considered decisions. When the domestic and international situation is in flux, as it is now, there’s a need for caution but also for boldness, for a policy that takes account of Polish specifics and Poland’s monetary policy strategy.”

To contact the reporters on this story: Dorota Bartyzel in Warsaw

To contact the editor responsible for this story: Balazs Penz at

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