Poland: There is no alternative to the continuous increase of interest rates, says a member of the central bank

Poland has no alternative to aggressive monetary tightening as the government’s actions to control rising prices can only further fuel inflation, a new member of the country’s central bank has said.

Tax cuts on everything from fuel to food could cause a delay in price increases, Ludwik Kotecki told Bloomberg, noting that the measures already represent high budget spending.

This burdens the central bank with the task of accelerating interest rate hikes to curb inflation, he said.

“Poland can not afford to stop raising interest rates,” Kotecki said in his first interview as a member of Poland’s central bank.

“Our monetary approach should be more aggressive than it was, if we were dealing with an appropriate sample of fiscal and monetary policy,” he added.

Kopeck, a former deputy finance minister and the country’s representative to the IMF, attended the first meeting last Tuesday, when the board raised the nine-year high to 2.75%.

Governor Adam Glapinski said he would seek support for a further increase of 50 basis points in March, signaling that a key interest rate of 4% or higher would not “hurt” the Polish economy.

Source: Capital

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