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Financials

Poland's c.bank head says rates won't change while inflation low -newspaper

WARSAW, June 13 (Reuters) - Poland should keep interest rates at the current level until inflation picks up, the newly appointed head of its central bank was quoted on Monday as saying by daily Rzeczpospolita.

Adam Glapinski, an ally of the governing Law and Justice (PiS) party, told another daily, Puls Biznesu, in a separate interview that monetary policy should be cautious as fiscal policy had slightly eased with the introduction of a new child benefit.

“The 500+ programme... is a solid impulse for consumer demand. This is why monetary policy should be conservative and cautious,” Glapinski told Puls Biznesu.

The eurosceptic PiS, which took office last year after eight years of government under the pro-business Civic Platform (PO) party, introduced a broad social spending agenda, including 500 zlotys ($130) a month in child benefit, financed from new taxes.

Glapinski, whose appointment was ratified on Friday by the lower house of parliament , told Rzeczpospolita he would “persuade monetary policy (council) members to keep interest rates at today’s level until inflation pressure returns.”

Poland has been in deflation since July 2014. The central bank has attributed that mainly to declining oil prices, although the decline has also spread to core inflation. CPI fell by 1 percent year on year in May, according to preliminary data.

Glapinski’s policy stance broadly matches that of his predecessor Marek Belka, who had kept interest rates unchanged at a record low of 1.5 percent since March 2015.

Glapinski also told Rzeczpospolita the central bank might become involved in the process of converting Swiss franc mortgages if parliament passed legislation to that effect.

Polish householders with mortgages denominated in francs saw their monthly payments surge after Switzerland scrapped its exchange rate cap against the euro in January 2015. Alleviating that financial burden was one of the PiS’s election campaign promises.

Glapinski also said most of the commercial banks in Poland should be in Polish hands, reiterating comments he made last month. Currently around 60 percent of the banks are controlled by foreign capital.

“A banking group is emerging at PZU and it seems that this is the place where the banks on sale could be effectively ‘domesticated’,” Glapinski told Puls Biznesu.

State-run insurer PZU secured control over a mid-sized lender Alior Bank in 2015.

Glapinski, who still needs to be sworn in by parliament, added that banks should be directly supervised by the central bank and not by financial market watchdog KNF as is the case now.

Reporting by Agnieszka Barteczko; editing by John Stonestreet

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