Polish MPC Hopeful Casts Doubts on Growth Impulse From Rate Cut

  • Poland's 3.5% economic growth is `sluggish,' candidate says
  • Central bank shouldn't be involved in government projects

More monetary easing in Poland won’t spur economic growth as investment decisions don’t hinge solely on borrowing costs, according to professor Grazyna Ancyparowicz, a candidate to the next rate-setting panel.

Ancyparowicz, who said she was asked by the ruling party to join the 10-member Monetary Policy Council, is among candidates to replace rate setters as their terms expire before the end of February. While the outgoing panel has kept the main interest rate unchanged at a record-low 1.5 percent since March, derivatives traders are betting on the new council to reduce rates over the next half year, according to prices of forward-rate agreements.

All new members of the Council will be appointed by Law & Justice, which controls both houses of parliament, and its allied President Andrzej Duda. The party said it will prefer candidates who advocate reducing rates as well as a more active central bank role in stimulating economic growth.

“The cost of money alone isn’t enough to stimulate investments,” Ancyparowicz said Dec. 12 in an interview in Warsaw. “More monetary easing would fail to spur economic growth.”

She’s the second person to publicly announce that they’ve been approached for the rate panel after Jerzy Zyzynski, a Law & Justice lawmaker. The party’s deputy head, Adam Lipinski, declined to say when the list of candidates will be ready.

‘Sluggish’ Growth

Official data show Poland’s economy, the European Union’s fastest-growing since the 2008 global crisis, expanded 3.5 percent from a year earlier in the third quarter. For Ancyparowicz, 67, a professor at the Katowice School of Economics, expansion in recent years is mainly the result of methodological changes to how gross domestic product is calculated, exchange-rate gains and growing indebtedness. The numbers hide what’s in reality a “sluggish” performance, she says.

“The country is treading water,” Ancyparowicz said.

Forward-rate agreements, derivatives used to bet on interest-rate moves, show traders see at least a quarter-point of easing over the next six months and some possibility that a cut may happen by March, when the new line-up of the Council will hold its first meeting.

Bank’s Role

Ancyparowicz says it’s up to the government to accelerate economic growth through its program of boosting small- and mid-sized companies, while she opposes any “direct engagement” of the central bank in “government projects.”

Further monetary easing will “certainly” harm profitability at commercial banks, which she called institutions of public trust that should operate in “stable conditions.”

“The central bank’s mission is the stability of the currency, and the National Bank of Poland has fulfilled the mission at least since 2000, though not always successfully,” she said.

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