March 12, 2020 / 10:54 AM / 3 months ago

Polish rate-setter says 50 bp rate cut could help virus-hit economy

WARSAW, March 12 (Reuters) - Polish rate-setter Eryk Lon has said that a 50 basis point cut from the current key lending rate of 1.5% would support the economy by easing financial pressure on companies as the new coronavirus spreads.

“I think that a reduction in interest rates, perhaps as high as 50 basis points, could contribute to this. Although, of course, an interest rate cut of 25 basis points would also be significant,” Lon wrote in an article for Radio Maryja portal.

In Lon’s opinion, the central bank could also consider introducing some of the unconventional measures used in other countries, such as buying corporate bonds or units in investment funds investing in the Polish stock market.

Lon is one of 10 members of the central bank’s Monetary Policy Council, which decides on interest rates.

The central bank spokesman was unavailable for comment.

Polish President Andrzej Duda was meeting heads of Polish financial institutions on Thursday including the finance minister and central bank governor. Duda wants to offer consumers and companies “solutions mitigating the effects of repayment of credit obligations”.

So far, 47 people have tested positive for coronavirus in Poland, a country of 38 million people. No one has died. (Reporting by Pawel Florkiewicz and Marcin Goclowski; Editing by Kevin Liffey)

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