Polish c.banker sees no reason to alter rates

Credit: REUTERS/Kacper Pempel

Polish central banker Eryk Lon said that the latest economic projections indicate that there will be no need to adjust interest rates for a while.

WARSAW, July 21 (Reuters) - Polish central banker Eryk Lon said that the latest economic projections indicate that there will be no need to adjust interest rates for a while.

But if there were to be a second wave of the coronavirus pandemic, hitting consumer and business sentiment, there would be an argument for easing monetary policy, Lon wrote in response to Reuters questions.

The central bank cut its benchmark interest rate to 0.1% from 0.5% in May, meaning the cost of credit has been lowered by a total of 140 basis points within three months.

"Given the anticipated macroeconomic conditions, it seems that interest rates should remain stable for a longer period," Lon wrote, commenting on the central bank's projection of inflation and economic growth released in July.

Lon is one of the most dovish members of the central bank's 10-strong Monetary Policy Council and has many times called for interest rate cuts.

The central bank said in its projection that gross domestic product will fall in 2020 by 5.4%, but return to 4.9% growth next year and 3.7% in 2022.

" ... Next year should bring a return to the fast economic growth characteristic of the 2014-2019 period, when in each year the real GDP growth rate was higher than 3%," he said.

"The scale of interest rates cuts this year was already significant enough to allow the Polish economy to overcome this year's economic problems related to the effects of the coronavirus epidemic."

(Reporting by Pawel Florkiewicz; Editing by Nick Macfie)

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