June 20, 2014 / 10:07 AM / in 4 years

UPDATE 1-Poland rate-setter says Belka should consider his position - report

* Central bank chief Belka under pressure over leaked tapes

* Rate-setter Rzonca says risk of eroding bank credibility

* Another rate-setter signals will work with Belka (Adds context and more details)

WARSAW, June 20 (Reuters) - A member of Poland’s rate-setting council, Andrzej Rzonca, was quoted as saying on Friday that central bank chief Marek Belka should consider whether he should stay in his job after he was caught on tape using expletives about central bank colleagues.

Rzonca’s remarks, published in a Polish newspaper on Friday, mean that two of the 10 members of the central bank’s Monetary Policy Council (MPC) have now been publicly critical of him over the tape affair.

“Governor Belka needs time. He will have to consider whether his denials were enough to remain in his post to avoid exposing the NBP (National Bank of Poland) to a further erosion of credibility,” Rzonca told Gazeta Wyborcza in an interview.

Of the remaining MPC members, three have indicated they can keep working with Belka. The views of three more are not known.

A ninth, Andrzej Bratkowski, was asked by Reuters for his view and said on Friday an MPC statement issued on Tuesday was “sufficient” comment. That statement said the MPC viewed positively its work with Belka but cautioned that mixing central bank duties with politics was unacceptable.

Belka himself is the tenth member of the council, which he also chairs.

A Polish magazine said on Saturday it had a recording of a conversation in a restaurant last year in which Belka told a minister he would be willing to help the government out of its economic troubles if the finance minister was fired.

Using an expletive to describe the council, according to the tape, he said it might try to block that plan but that there were ways to work around it.

The governor said his words had been taken out of context, that he had not done anything to break the law, and had not exceeded his authority as central bank governor.

Polish law requires that the central bank be independent of the government. Some analysts say that, in the light of Belka’s comments on the tape, it risked losing credibility with financial markets as an independent institution.

Some analysts say the tape affair could make it harder for the MPC to decide whether to keep interest rates at their record-low level of 2.5 percent, or to cut them further in the light of the inflation hovering around zero.

The zloty was slightly weaker on Friday against the euro. Dealers cited a Federal Reserve meeting on Wednesday as the main reason for the decline and said the tapes affair was not affecting the currency. (Reporting by Marcin Goclowski, Pawel Florkiewicz and Michal Janusz; Editing by Larry King)

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