Adam Glapiński offered the assessment at a news conference in Warsaw on Wednesday, the state PAP news agency reported.
A day earlier, the Polish central bank’s Monetary Policy Council raised key interest rates for the fifth consecutive time in a bid to tame surging consumer prices.
The reference rate went up by 50 basis points to 2.75 percent, from 2.25 percent, amid rising inflation, which hit 8.6 percent in December.
Referring to Tuesday’s move by the Monetary Policy Council to hike interest rates again, Glapiński said: “There is no question that the National Bank of Poland (NBP) made the decision to start a cycle of interest-rate increases at the right time.”
Further monetary tightening
He also told reporters that “as the head of the NBP and the chairman of the Monetary Policy Council, I will definitely be recommending that the council further tightens monetary policy at its next meeting, to continue the cycle ... just as it has done for the past five months.”
Glapiński added that “raising the reference rate to 4 percent wouldn’t harm the economy.”
“We are counting on the zloty becoming stronger and we’ll do everything for it to strengthen,” he also said.
Health of the economy
According to Glapiński, "this is a realistic prospect" due to the "underlying health" of the Polish economy.
“We have the foundations for fast growth in place, a diverse economy and a robust manufacturing sector ... we are producing and exporting almost everything - this won’t be damaged by an increase in interest rates,” Glapiński told the news conference, adding that unemployment was low and wages were rising faster than inflation.
He also said that “societies have learned to function amid the pandemic” and so “the global economic situation will be improving.”
Inflation to fall in 2023
At the same time, Glapiński cautioned that inflation was still rising in Poland, reflecting trends in other Western economies, but added that the rate of price rises was likely to drop to around 5 percent in 2023.
He voiced hope that the government would extend a range of tax cuts intended to drive down inflation "until the end of the year."
Glapiński's six-year term as governor of the National Bank of Poland ends on June 21.
Poland's President Andrzej Duda at the end of last month asked parliament to reappoint him as central bank chief for another six-year term.
Glapiński's reappointment is subject to approval by parliament.
(pm/gs)
Source: PAP