Polish Rate Setters Criticize Central Bank Chief for Conflict
Polish central bank monetary policy makers accused Governor Slawomir Skrzypek of involving the rate- setting body in his dispute with the government, a move that may dent their credibility as members of an independent panel.
Skrzypek called on the government to overhaul public finances, cooperate with the central bank in fighting inflation and prepare a program to adopt the euro during a press conference on June 25. The comments were not agreed to by the council beforehand, policy maker Dariusz Filar said in a phone interview in Warsaw today.
“I was totally surprised as I found out about the governor's address from the media,'' he said. “It was a blunder as it happened during a press conference to explain the council's rate decision. These two things should not have been combined as they involve policy makers in a political conflict.''
The central bank chief and the Cabinet blame each other for accelerating inflation that has led to higher borrowing costs and concerns that faster wage growth and employment will boost price growth even more. The inflation rate, at 4.4 percent in May, will remain above 3.5 percent upper limit of the central bank's target until 2010, the institution said yesterday.
Prime Minister Donald Tusk said on June 22 that the Monetary Policy Council waited too long before raising interest rates as inflation accelerated. That assessment was echoed by Finance Minister Jacek Rostowski.
Rate Increases
Policy makers raised borrowing costs four times this year to curb demand that has been derived from wage growth and employment pay day loans.
“The governor has defended the Monetary Policy Council, but the views of its members vary so it should have been earlier agreed to with us,'' Filar added.
Fellow policy maker Halina Wasilewska-Trenkner agreed.
“The cooperation with the government would be needed, and appealing for that through the media is inappropriate,'' she said in a phone interview. “The escalation of a conflict with the government won't help this issue. As long as there is no consensus between two parties, it should not be publicized.''
She added that even though the substance of Skrzypek's appeal is justified, it's not the way to resolve the problem.
The clash marks a fresh conflict between policy makers and the governor. The nine rate setters earlier this year criticized changes in the central bank's structure, prompting Deputy Governor Jerzy Pruski to quit. Policy makers asked the parliament's top official and the Constitutional Tribune to clear up the issue.
“Mutual relations now require serious discussion with Governor Skrzypek to clarify some things,'' said Filar. “It's a pity that we have to talk about it'' after the fact and not before.