Not good time to mull further rate cuts – central bank head
March 13, 2013
Central bank head Marek Belka
Poland's Monetary Policy Council might cut interest rates further only if economic developments differ from the scenario presented in the latest inflation projection, central bank NBP head Marek Belka told economic news web service obserwatorfinansowy.pl.
"A portion of council members has a view of the economy that is more optimistic than NBP projection," Belka said. "And if it turns out that economic reality is different than that in projection, then I would not even rule out further monetary policy easing."
At the same time, Belka said that "now is not a good time" to consider further cuts.
Belka rebuts suggestions that the council is late with its cuts and is now acting pro-cyclically.
Poland’s Finance Minister Jacek Rostowski Said on Monday that the Council should have launched the easing cycle six months sooner than it did. "I regret it hadn't happened 6 months earlier . . . our economy would have been stronger today, unemployment lower," he said.
"The projection showed that council's being late is out of question," Belka said. "We will have a negative demand gap throughout projection horizon to 2015."
"It might be said: the council could have acted prompter; I accept the criticism, but I do not accept [allegations' that it [March cut] is a pro-cyclical measure, and hence no longer necessary," Belka said. "Unfortunately the situation is not so good for us to say that March cut may have been procyclical."
At its March sitting Poland's Monetary Policy Council passed a surprising 50 bps cut, calling it "completion" of the easing cycle, with Belka suggesting at a news conference the council is now in the "wait-and-see" mode. Earlier the council had cut rates by 100 bps in four consecutive 25 bp moves in November-February period.