National Bank of Poland President Marek Belka said last week that recent macroeconomic data could convince the Monetary Policy Council (RPP) to maintain its neutral stance for a longer period than initially envisioned.
Source: National Bank of Poland
“This data gets us closer to a decision on extending the period of neutrality in monetary policy,” Mr Belka said at a press conference.
Previously, the RPP had sent strong signals that it would keep interest rates unchanged until the end of this year. According to the minutes of its October sitting, the RPP was unanimous in that view. The NBP’s main rate stands at a record low of 2.50 percent.
RPP member El˝bieta Chojna-Duch agreed with Mr Belka, but also indicated that actions taken by central banks around the world could convince the RPP to lower rates further. Ms Choj-na-Duch is widely considered one of the council’s doves.
“Extending the period of the neutral bias in monetary policy to mid-2014 seems, in my opinion, reasonable, assuming a lack of shocks and an unchanged economic environment,” she said, adding however that, the council “may even mull a return to an easing bias in monetary policy, based on the decisions we observe are made by other central banks.”
The minutes of the October RPP meeting also emphasized concern about the strength of Poland’s economic recovery.
“While discussing the current business conditions, it was noted that some data on domestic economic activity proved worse than anticipated,” the document read. “In particular, the growth of industrial output and of construction output in August 2013 showed some deceleration of positive tendencies observed in the previous period.”
However, Mr Belka seemed to indicate he holds a different view. In his statements, he pointed out that a good central bank knows “when to take away the punch bowl,” implying that he thinks the council should be considering raising rates rather than lowering them.
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