Minutes from Poland central bank show some MPC members favoured a rate rise at the August 24 meeting. A  motion to raise rates by 50bp was put to the vote and rejected; the refinancing rate remained at 3.5 per cent.
From the minutes:

While considering the decision on interest rates, some Council members argued that the present GDP growth, with a possibility of its acceleration and a likely reduced potential output growth, could contribute to a rise in inflationary pressure in the monetary policy transmission horizon. Those members emphasized that the current level of interest rates was adequate for a situation of strong slowdown in the growth of the Polish economy and the recession in its environment, and that given recovery gaining strength in Poland it was justified to increase the NBP interest rates. Read more

Slightly more bullish than last month: this is what we can glean from minutes just released of the Polish central bank’s June 30 meeting.

While the council settled on holding rates constant, this month “some members … indicated that interest rates in Poland were running at a level lower than the natural rate for the Polish economy. According to those Council members further economic recovery and a growing risk of inflation running above the NBP inflation targetmight speak in favour of raising the interest rates.” There was no mention of these bullish views in last month’s minutes.

The new head of Poland’s central bank says inflation could rise above 3.5 per cent, a percentage point above target. Dow Jones reports:

The Monetary Policy Council of the National Bank of Poland Wednesday dropped its informal neutral policy bias from its interest rate meeting statement and sees new upside risks for consumer price inflation, central bank Governor Marek Belka told a press conference Wednesday…. Read more

Poland’s government can expect tough scrutiny of its efforts to cut the budget deficit from Marek Belka, the country’s new central bank governor.

In an interview with the FT today, Belka says: “I will remind the government to keep its promises.” For Belka, a deficit hawk and a former Polish prime minister and finance minister, even the 3 per cent budget deficit target of the Polish government and many other European countries is not ambitious enough.

“We should not forget that the growth and stability pact talks about 3 per cent not as a goal but as a maximum,” he says. “The real goal is a balanced public sector budget over the economic cycle. Over the longer term we should be aiming at a surplus.”

For Belka, the model of fiscal probity is Germany, Read more

Former prime minister Marek Belka has been voted in as the new governor of Poland’s central bank, by a clear majority in the lower house (253 to 184). Mr Belka is a well-known international figure, serving as the IMF’s director for European Department since 2008. Prior to that he was under-secretary general at the UN and executive secretary of the UN Economic Commission for Europe.

Mr Belka replaces Sławomir Skrzypek, who was killed in the Polish air disaster in April, and his deputy Piotr Wiesiolek had been acting governor. Read more

Simone Baribeau

The National Bank of Poland today announced (as expected) that it would hold its policy rates for the eleventh straight month.

No surprise, though the country is suffering with above target inflation. But few European countries (notably Norway) have raised rates, and the eurozone crisis is causing others, who may have been on the cusp of following suit, to hold off. Read more

A tiff between the Polish finance ministry and the central bank has been resolved today – in the ministry’s favour. The flexible credit line, which was put in place this time last year, cost the country about $50m a year for the right to call upon $20.58bn (at ?). Poland did not intend to use the facility, and indeed they did not use it last year; theirs was the only economy in the EU not to suffer a recession. The central bank has said the country’s $85.2bn currency buffers would be sufficient in case of financial woes. But in light of Greek contagion, market fear seems to outweigh the fundamentals, in which case this extension is prudent.

The zloty is too high, even though recent intervention by the central bank has helped to weaken the currency to levels last seen a month ago. So says Polish deputy finance minister Ludwik Kotecki.

“At this stage of the recovery, the zloty is probably too strong and for sure further appreciation of the zloty should be avoided,” Mr Kotecki told Bloomberg in an interview on April 17 in Madrid. “The recovery is not well grounded and risks still exist. Too strong a zloty would be negative.” He declined to speculate on what the optimal exchange rate would be for Poland’s economy. Read more

The president of the Polish central bank was among those killed in Saturday’s plane crash, which also killed the country’s President and religious and military elites. Slawomir Skrzypek will be replaced by the bank’s deputy, Piotr Wiesiolek. The 10-member monetary policy council will also be managed by Mr Wiesiolek. Although his views are not well known, no significant change is expected at the bank. Forty-six-year old Mr Wiesiolek is a former banker specialising in asset management, who also has international central banking experience. Click on his photo for his official biography. More on the likely policy effects of this tragedy from Jan Cienski.

Ralph Atkins

The European Central Bank is being worryingly opaque – even by its own standards – about the enhanced role it is playing across Europe, including beyond the eurozone’s eastern border. It is now an open secret in financial markets that the ECB has established currency swap arrangements with the Polish and Hungarian central banks, making it easier for its counterparts in Warsaw and Budapest to provide euros locally. Yet, if you ask the ECB, it refuses to comment.

Such behaviour seems bizarre – and could be counter-productive. Read more