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UPDATE 1-Polish hopeful moots quantitative easing to support growth
March 9, 2016 / 2:05 PM / 2 years ago

UPDATE 1-Polish hopeful moots quantitative easing to support growth

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WARSAW, March 9 (Reuters) - Poland’s central bank should consider using quantitative easing tools to help boost investments in the economy, a candidate for the bank’s rate-setting Monetary Policy Council said on Wednesday.

The issue of potentially increasing the central bank’s support for economic growth has remained on investors’ radar following a decision by rating agency S&P to downgrade Poland’s credit rating in January.

The agency warned at the time that any moves by the ruling right-wing Law and Justice (PiS) party to undermine the independence of the central bank could prompt further downgrades.

“I think the government’s policy should have more support when it comes to economic growth. Perhaps, we should look at quantitative easing tools,” Jerzy Zyzynski told a parliamentary committee.

“Perhaps there is a need for money creation to finance investments in development,” Zyzynski said, adding that such money creation would not be aimed at supporting the budget.

During last year’s election campaign PiS pledged to speed up economic growth in Poland, the largest economy in ex-communist central Europe, including via a programme of cheap loans from the central bank.

Despite robust economic growth of about 3 percent and a central bank inflation target of 2.5 percent, Poland’s consumer prices have been falling for more than a year now.

Asked about potential scope for interest rate cuts, Zyzynski said there was still “some space” to reduce rates. The key rate has remained at an all-time low of 1.50 percent since March last year.

Zyzynski is currently a PiS member of parliament. He still needs to be formally approved by parliament to his post. (Reporting by Marcin Goettig and Pawel Florkiewicz; Writing by Agnieszka Barteczko and Marcin Goettig; Editing by Gareth Jones)

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