Bloomberg News

Polish Monetary Policy Should Focus on Growth, Wisniewski Says

June 27, 2012

Polish monetary policy should focus on economic growth rather than inflation as investors value financial stability the most, said Jacek Wisniewski, a member of the Prime Minister’s Economic Advisers Council.

“The international credibility of countries is defined by their fiscal situation and solvency these days, so the central bank has to focus more on growth than on cutting inflation for the country’s economic stability,” Wisniewski, who is also the chief economist of Raiffeisen Bank Polska SA, said in an interview in Warsaw on June 25. “There is no need to raise Polish borrowing costs more.”

The Narodowy Bank Polski last month raised its benchmark seven-day rate a quarter-point to 4.75 percent to combat inflation, becoming the European Union’s only central bank to increase borrowing costs this year. Policy makers left the rate unchanged this month and warned that more monetary tightening may be needed if price growth doesn’t slow and the economy avoids a steep slowdown.

Poland’s gross domestic product, the largest among the European Union’s eastern members, will grow 2.7 percent this year after a 4.3 percent advance in 2011, the fastest pace in the trading block, according to the European Commission.

The cost of insuring Polish debt for five years using credit-default swaps has dropped 58 basis points this year to 224, according to data compiled by Bloomberg. Dropping credit- default swaps signal improving perception of creditworthiness.

Inflation Slows

Since the rate meeting three weeks ago, inflation unexpectedly decelerated to 3.6 percent in May, the slowest in 15 months, while jobs growth at companies with more than nine workers held steady at 0.3 percent and wages rose 3.8 percent, missing economist forecasts. Retail sales grew 7.7 percent, less than the 10 percent average average advance far this year and down from an almost 14 percent increase last May.

Monetary Policy Council member Andrzej Bratkowski said June 25 he sees no need to raise rates and warned that GDP expansion slowing to less than 2 percent “would complicate fiscal consolidation that depends on economic growth to some degree, so one has to be cautious not to harm that growth additionally,” according to the state-owned news service PAP.

Next year’s draft budget assumes the benchmark interest rate will be half a percentage point lower than at present.

“Following the global slowdown and commodities prices drop, inflation in Poland will also drop, driving expectations for lower interest rates,” Wisniewski said. “The government’s 2013 budget draft expresses that logic.”

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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