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UPDATE 1-Poland c.bank 'preparing' not 'planning' to use unconventional policies
April 13, 2014 / 4:15 PM / 4 years ago

UPDATE 1-Poland c.bank 'preparing' not 'planning' to use unconventional policies

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By Jonathan Spicer and Leika Kihara

WASHINGTON, April 13 (Reuters) - Poland’s central bank is “preparing” to possibly use unconventional policy instruments if need be, but not “planning” on it, its governor said on Sunday.

Marek Belka, speaking at an International Monetary Fund event in Washington, said the instruments could be used to intervene in different asset classes. Referring to macroprudential policymaking, he said Poland needed to “brace ourselves for the unthinkable.”

“Even if it is not so much in the mandate and not in the tradition of a relatively new independent central bank, we are preparing ourselves for unconventional policies,” Belka said.

“We are not planning but we are preparing instruments ... to deal with the banks in need ... which means being prepared to intervene on different asset classes.”

On Wednesday Poland’s central bank decided to keep its key rates at an all-time low of 2.5 percent. Its economy, the largest in central and eastern Europe, is expected to grow this year even while inflation, now at an annual rate of 0.7 percent, is expected to stay below the central bank’s 2.5 percent target.

The crisis in neighboring Ukraine could yet depress Polish inflation, especially if trade disputes disrupt Polish food exports to Russia.

Below-target inflation generally increases pressure on the central bank to loosen monetary policy further, but Belka has said it was very unlikely that would happen. (Reporting by Jonathan Spicer and Leika Kihara; Editing by Sandra Maler)

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