Poland’s central bank will keep cutting borrowing costs to spur the nation’s ailing economy, Governor Marek Belka said today amid mounting criticism that monetary-policy makers acted too late to stem the slowdown.
“One can expect that the easing will be continued,” Belka said in an address in the Senate in Warsaw. He declined to speak about the scope of interest-rate cuts, adhering to a blackout on comments before the next rate meeting on Feb. 5-6.
Belka’s first official appearance in Parliament since July and the November start of the central bank’s easing cycle comes after Finance Minister Jacek Rostowski said policy makers made “mistakes” and were “too late” in cutting rates. Premier Donald Tusk on Jan. 25 appealed to the rate-setting Monetary Policy Council to take “quick” decisions to help the economy.
“The government is being increasingly explicit in asking for measures to support growth,” Pasquale Diana, an economist at Morgan Stanley in London, said in a e-mailed report Jan. 25.
The zloty traded at 4.1985 per euro at 3:45 p.m. in Warsaw, weakening 0.3 percent from yesterday. It’s depreciated 2.7 percent this month as the slowest economic growth in three years fuels speculation for more rate cuts, reversing part of a 9.4 percent gain last year that was the biggest appreciation among the 31 major currencies tracked by Bloomberg.
The central bank stepped into foreign-exchange markets four times in 2012 to shield the currency from sudden swings, Belka said. The bank “defends the zloty when needed,” he said.
Poland’s central bank was the only one in the EU to raise rates in 2012 and began cutting borrowing costs a year later than the European Central Bank and five months after the Czech Republic. The economy expanded 2 percent in 2012, the slowest in three years, and growth may further weaken to 1.7 percent in 2013, the median of 31 estimates in a Bloomberg survey shows.
It’s not clear when the economy will rebound, though GDP growth of 2.2 percent this year is “realistic,” Belka said. The general government deficit probably won’t exceed 3.5 percent of GDP, Belka said, adding that he “wouldn’t trim the structural” shortfall further after the gap narrowed to about 2.2 percent of GDP from 8 percent two years ago.