Poland’s central bank is preparing measures to deal with any market volatility amid low global inflation and persistently slow economic growth, Poland’s central bank chief Marek Belka said today.
“We are preparing ourselves for unconventional policy,” Belka said during a panel session at the International Monetary Fund spring meetings in Washington. “We are not planning but we are preparing instruments to deal with the way the banks in need deal, which means being prepared to intervene on asset markets of different classes.”
Poland’s central bank last week left its benchmark interest rate at a record low of 2.5 percent for a ninth month as inflation remains subdued while economic growth recovers faster than expected. The country’s interest rate is currently at the “right level” and the prospect of slow global economic growth means borrowing costs will remain low for some time, Belka said.
The country’s currency, the zloty, has appreciated 2.8 percent in the past six months, the second-best performance after Korea’s won among 24 emerging-market currencies tracked by Bloomberg.
Inflation undershot the central bank’s target of 2.5 percent for a 15th month in February as consumer prices rose 0.7 percent from a year earlier. Belka said the level of inflation isn’t a problem now for Poland, although persistently low interest rates can have destabilizing effects, Belka said.
“We are now preparing ourselves for the next phase of market turbulence,” Belka said during a seminar in Washington. “We are introducing new macro-prudential instruments - loan to value - which we have never used,” Belka said.
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