Bloomberg News

Belka Says Polish Central Bank ‘Open’ to Rate Cuts on Slowdown

September 05, 2012

Polish central bank Governor Marek Belka commented today on the outlook for borrowing costs after the Monetary Policy Council kept the main interest rate at 4.75 percent, matching the forecast of 27 of 28 economists surveyed by Bloomberg.

The following are selected comments from Belka at a news conference in Warsaw.

On scope for interest-rate cuts:

“The last sentence of the statement has to be interpreted as opening the possibility to such an event, but whether it will happen and when, can’t be currently determined. We will receive a batch of key economic data in November, including our inflation and growth projections. It doesn’t mean, however, that already in October we won’t receive sufficient information confirming an unfavorable tendency that has started to develop in the economy.”

On 2013 budget and growth:

“It’s hard for me to say whether we are more optimistic than the prime minister and the finance minister because I didn’t have a chance to listen to their press conference. However, judging by the assumptions for the 2013 budget, our assessment of economic developments and prospects is converging.

“Our internal economic-growth forecast is currently less optimistic.

“I expect the budget deficit will be effectively reduced in 2012 because of spending cuts.

“The last two years seem to have brought significant fiscal consolidation and the plans for next year don’t result in a loosening but suggest that the policy will be equally restrictive. I think that’s prudent.”

On interest-rate changes:

“Radical policy changes in either way are generally not liked by central banks, including us.

“Changes in interest rates should take into account that we want them to be positive in real terms, it’s a simple criterion of conventional monetary policy. This was behind our decision in May and it’s still in the back of our mind. This doesn’t mean that rate cuts are not possible, but we also have to take this into account.”

On zloty and bonds:

“The interest-rate decision has to take into account the situation on the foreign-exchange market. Let me emphasize that the goal is not to impact the exchange rate through those changes. On the contrary, changes in interest rates cannot become a factor that destabilizes the sentiment of foreign investors.

“The zloty is not a strong-man any more, as it was two weeks ago, but the situation on the government bond market is excellent. We are very pleased that among buyers of our bonds there are long-term investors, including central banks. That means the zloty has become a currency to invest in for some foreign central banks.”

On inflation target:

“Yesterday, we discussed our monetary policy assumptions for 2013, but I have to stress that we didn’t discuss changes to the inflation target.”

To contact the reporters on this story: Piotr Skolimowski at

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

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