Poland’s Glapinski says demand may drive CPI in autumn -FT

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Demand-driven inflation that would require a response from the Polish central bank could appear in autumn, or maybe mid-2022, Governor Adam Glapinski said https://www.ft.com/content/e51c6e59-12d1-4ec2-a82c-ea36891e60fd in a Financial Times interview published on Sunday.

But current inflation levels were not worrying, he said.

A spike in inflation caused central banks in the Czech Republic and Hungary to raise rates in June, but the National Bank of Poland has stuck to dovish rhetoric, maintaining that the driving factors were temporary and not influenced by monetary policy.


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“If we see that there is a tendency that in a few quarters this rise in prices could be driven by these demand-side factors, then we will act,” he was quoted as saying.

“When will it happen? It’s hard to say precisely, but rather not earlier than in the autumn of this year. Or maybe only halfway through next year.”

Monthly inflation in Poland stood at 4.4% year-on-year in June, well above the central bank’s target range of 2.5% plus or minus one percentage point.

Glapinski reiterated that regulatory and supply-side factors were currently driving inflation, and that when these were stripped away, inflation was closer to the midpoint of the target range.

“Our approach is similar to that of the Federal Reserve, or the ECB: we are waiting for the economic recovery to become certain and solid, and then we will observe whether there is a risk of a rise in inflation,” he said.


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“And we certainly won’t hesitate: we will act immediately as soon as it is necessary.”

In a separate article https://www.omfif.org/2021/07/currency-intervention-can-help-counter-covid-crisis published on Sunday, Glapinski said that interventions in the currency market could help deal with the effects of the COVID-19 pandemic.

In December, the NBP intervened in currency markets to weaken the zloty. It has also been buying government and government-secured bonds on the secondary market since the first wave of the pandemic in 2020.

“We need to focus on keeping the recovery going… If this requires foreign exchange intervention to hold down otherwise unacceptable currency appreciation, then that is a legitimate line of defense,” he wrote in the article for the Official Monetary and Financial Institutions Forum.

“The best way forward for Poland and other emerging market economies is to use a mix of conventional and unconventional monetary policies.” (Reporting by Maria Ponnezhath in Bengaluru, Alan Charlish in Warsaw; Editing by Clarence Fernandez, Raissa Kasolowsky and Nick Macfie)


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