Poland still has scope to use rates to impact economy: Finance Minister Mateusz Morawiecki

The Polish central bank has held its benchmark rate unchanged at 1.50 percent since a 50 basis point cut in March last year

By: Reuters | Warsaw | Published:November 20, 2016 8:29 pm
Poland, Polish Independence Day, Polish nationalists, Polish Independence Day march, Poland news, world news, latest news, indian express File Photo: Nationalists, carrying Polish flags, march in large numbers through the streets of Warsaw to mark Poland’s Independence Day in Warsaw, Poland, Nov. 11, 2016. (Source: AP/Czarek Sokolowski, file)

Poland can still use interest rate changes to influence the economy, unlike many other countries that are left with no monetary policy ammunition, Finance Minister Mateusz Morawiecki said on Sunday.

The Polish central bank has held its benchmark rate unchanged at 1.50 percent since a 50 basis point cut in March last year. Economists polled by Reuters expect a rate hike in early 2018.

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“Polish monetary policy is one of the most conservative ones, as we were probably the last European Union state with such high real interest rates. We still have the buffer to cut the rates or to increase them,” Morawiecki told state-run news agency PAP. “Many other countries no longer have the ammunition to use their monetary policy,” he added.

Morawiecki, who is a deputy prime minister and also serves as economy minister, said an expected U.S. rate rise next month would have an impact on the Polish currency and debt, as reverberations would be felt in markets worldwide.

“The strengthening dollar and higher yields of the U.S. bonds will definitely have an impact on the Polish market. Perhaps Polish bonds will become cheaper and thus the yields will be higher,” he said.

Polish zloty and bond prices weakened in the past week, something that economists linked to government plans to cut the retirement age and a proposal to move private pension fund assets into a state fund.

Morawiecki said economic growth would accelerate starting from the second quarter of 2017 following an expected slowdown in the fourth quarter of 2016 and the first quarter of 2017.

Third quarter growth hit its weakest annual level in three years of 2.5 percent, with economists mainly blaming reduced investment caused by lower inflows of European Union aid.