WARSAW: Polish Monetary Policy Council member Andrzej Rzonca said that deflation in Poland will probably last until October or more and that he would not influence spending by consumers as their income steadily rises, reiterating that rates should be hiked rather than lowered.
Poland has kept rates at a historic low of 2 percent, since a 50-basis-points cut in October, and the central bank has signalled a cut as early as in March due to prolonged deflation.
“Households are able to finance increased consumption. Thanks to price cuts, increased employment and moderate pay-rises…,” Rzonca said in an article written jointly with economist Piotr Cizkowicz and published on Monday by Rzeczpospolita daily.
“The threat for Poland is not of deflation but an appearance of macroeconomic imbalances caused by too low interest rates kept for too long,” Rzonca said.
Rzonca, who was against the last rate cut, also wrote that deflation in Poland may stay at up to 1.5 percent in February and March after it hit 1.3 percent in January.
