Demand-driven inflation that would require a response from the Polish central bank could appear in the fall, or perhaps mid-2022, said Governor Adam Glapinski https://www.ft.com/content/e51c6e59-12d1-4ec2- a82c-ea36891e60fd in a Financial Times interview published on Sunday.
But current levels of inflation are not worrisome, he said.
A spike in inflation prompted central banks in the Czech Republic and Hungary to hike rates in June, but the National Bank of Poland has stuck to mild rhetoric, arguing the drivers were temporary and not influenced by monetary policy .
“If we see that there is a trend that in a few quarters this price increase could be driven by these factors on the demand side, then we will act,” he said.
“When will it happen? It’s hard to say precisely, but not earlier than in the fall of this year. Or maybe only in the middle of 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 supply-side and regulatory factors were driving inflation, and that when they were removed, 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 be safe and solid, and then we will see if there is a risk of an increase in inflation,” he said.
“And we certainly will not hesitate: we will act immediately as soon as necessary.”
In a separate article https://www.omfif.org/2021/07/currency-intervention-can-help-counter-covid-crisis published Sunday, Glapinski said that forex market interventions could help deal with the effects of the COVID-19 pandemic.
In December, the NBP intervened in the currency markets to weaken the zloty. It has also been buying government and government guaranteed 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 keep currency appreciation low otherwise unacceptable, then that is a legitimate line of defense,” he wrote in the article for the Official Forum of Monetary and Financial Institutions. .
“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; Edited by Clarence Fernandez, Raissa Kasolowsky and Nick Macfie)