Zloty Weakens as Polish Central Banker Gilowska in Hospital

The zloty weakened after a report that Zyta Gilowska, a Polish central banker who backed monetary tightening at least twice in 2012, was in hospital.

Gilowska’s absence may prove “very important” to the outcome of next week’s meeting of the 10-member Monetary Policy Council, fellow policy maker Adam Glapinski told reporters in Warsaw. Jaroslaw Kaczynski, the leader of Poland’s biggest opposition party, said at an economic conference that Gilowska, 63, wasn’t in attendance because she is awaiting a “serious” medical procedure. She will not take part in the Oct. 2-3 policy meeting, council member Andrzej Kazmierczak said.

The zloty depreciated 0.3 percent to 4.1459 against the euro at 4:57 p.m. in Warsaw, the third-steepest decline among more than 20 emerging market currencies tracked by Bloomberg. Before Kaczynski’s comments, the zloty traded at 4.1482, data compiled by Bloomberg show. The yield on five-year zloty bonds increased two basis points, or 0.02 percentage point, to 4.35 percent.

“Her absence would mean one less person who would oppose cutting interest rates already in October,” Grzegorz Maliszewski, chief economist at Bank Millennium SA (MIL), said by phone from Warsaw today. “She is known as one of the more hawkish members of the council.”

The central bank is under pressure to loosen policy to stoke economic growth, which fell to an almost three year low in the second quarter, according to data from the Central Statistics Office. Forward rate agreements, used to speculate on interest rates, show trader bets on the central bank reversing its May interest rate increase and cutting borrowing costs by 50 basis points over the next three months.

Voting Record

Gilowska has been a supporter of monetary tightening, according to voting records on the central bank’s website. She backed a quarter-point interest rate increase in April, which was defeated in a 7-3 vote and was part of a 8-2 majority that increased the reference rate by 25 basis points to 4.75 percent in May, the records show.

The central bank’s inflation and economic growth projection in November will be key for the council as it decides on whether to change interest rates, PAP newswire reported Gilowska as saying on Sept. 21.

Magdalena Rusiecka, from the Monetary Policy Council’s secretariat, said she had no knowledge about Gilowska’s health. Przemyslaw Kuk, a spokesman for the Warsaw-based central bank, declined to comment when contacted by phone.

Heart Defect

Gilowska, who served as finance minister in 2005 and 2006 in a government led by Kaczynski, wasn’t present at the July rate meeting, the records show. Information from the Sept. 4 council meeting hasn’t yet been published.

Gilowska told Super Express newspaper in 2009 that she had been suffering from a “congenital heart defect” and underwent an aortic valve surgery in 2004. She is one of three council members appointed by late President Lech Kaczynski in February 2010, together with Kazmierczak and Glapinski.

“There’ll be one vote missing” at next month’s rate meeting, Glapinski told reporters on the sidelines of the opposition party’s seminar. “I won’t deny that it’s a very important vote.” The central bank should keep rates steady until the end of this year as inflation is elevated, Glapinski told reporters in Warsaw today.

Gilowska’s absence “may or may not” have an impact on the deliberations next week as there “could be various outcomes,” Kazmierczak said.

Poland’s central bank’s law states that a Monetary Policy Council member may be dismissed in the case of “illness which permanently prevents him/her from performing his/her responsibilities.”

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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