Poland's fiscal policy limits but does not close scope for interest rate cuts, says c. bank governor
Fiscal policy limits, but does not close, the scope for interest rate cuts, central bank NBP governor Adam Glapinski told a press conference following the MPC decision-making meeting held on October 7-8.
"Fiscal policy has long remained loose, exceptionally loose compared to the rest of Europe (...). This is the greatest risk to inflation and macroeconomic stability in the medium and long term," said Glapinski.
"In the draft budget bill, the government has assumed that the public finance sector deficit will increase again, to 6.9 percent of GDP. We are again dealing with a loosening of fiscal policy. Fiscal policy is therefore pro-inflationary and reduces the scope for interest rate cuts," he added.
The NBP governor assessed that fiscal policy limits the scope for interest rate cuts, but does not close it.
"Fiscal policy limits the scope for interest rate cuts. But I would like to emphasise that it limits it, but does not mean that it closes it completely. It limits it because we have to take it into account all the time. We are seeing attempts to tighten policy," said Glapinski.
doa/ nl/ han/