Poland `Can't Turn a Blind Eye' to ECB Amid Record Rate PauseDorota Bartyzel and Andrew Langley
MPC’s Hardt sees ECB policy action prompting Polish adjustment
Hardt says Polish rate increase in 2019 isn’t ‘off the table’
Despite having no plans to join the euro zone in the foreseeable future, Poland will nonetheless need to adjust its monetary policy if the currency bloc winds down stimulus, according to a member of the country’s interest-rate-setting panel.
Lukasz Hardt, who’s served on Poland’s Monetary Policy Council since 2016, said he’s “looking very carefully” at messages from the European Central Bank as it weighs how and when to roll back policies aimed at stimulating growth. While Hardt said a Polish rate increase in 2019 “is definitely not off the table,” he stressed that the trigger for action may come from outside.
“Of course our policy, even as the Polish central bank is independent and runs its own policy, can’t turn a blind eye to ECB decisions,” Hardt said Tuesday in an interview in London. “Even if its decisions on normalizing its policy seem still very far from now, we’ll definitely need to adjust if the ECB takes action.”
Poland’s nationalist political leaders, along with central bank Governor Adam Glapinski, have rejected any quick moves to adopt the euro, saying the bloc must shore up its finances first. A floating exchange rate also benefits the nation’s $470 billion economy, they say.
Perched outside the euro area but dependent on it for two-fifths of its exports, Poland’s economy is enjoying a period of expansion that’s so balanced it’s “boring,” according to Glapinski. Strong growth and low inflation have resulted in benchmark borrowing costs staying at 1.5 percent for three years, even as some east European nations and the U.S. Federal Reserve hike rates. Glapinski says they may remain steady into 2020.
With an emerging-market sell-off hurting Polish assets, Hardt said the current zloty exchange rate is “nothing we should be afraid of.” The currency has lost 1.2 percent against the euro this month, extending this year’s decline to 2.5 percent, eastern Europe’s second-worst performance behind the Russian ruble.
The zloty rate against the euro is “very OK, I would say, both for importers and for exporters,” Hardt said. “It’s not a problem for me right now.”
Even with tighter U.S. monetary policy helping fuel the weakness among developing-market assets, Hardt underlined the greater role played by Europe’s rate setters.
“The Fed is important for us but more important is definitely the ECB.”
— With assistance by Adrian Krajewski