Poland could cut rates if COVID fourth wave hits hard, says c.banker
WARSAW, July 16 (Reuters) - If a fourth wave of COVID-19 hits Poland's economy hard, interest rates could be cut or the scale of asset purchases increased, rate-setter Eryk Lon said, adding that much will depend on the central bank's November inflation projection.
Currently, the number of daily new coronavirus infections is around 100, but the Ministry of Health reports that the new highly contagious Delta variant, which is spreading rapidly in other countries, now accounts for around 30% of cases.
The government has urged people to get vaccinated and warned that if there is an increase in cases in the autumn, they could reimpose restrictions which previously badly hurt the economy.
"In a situation where the impact of the fourth wave on the outlook for economic growth turned out to be significant, we could cut interest rates or increase the scale of asset purchases, or both," central banker Lon wrote in response to Reuters' questions.
"I think a lot will be decided after the publication of the November projection. Then it will be possible to see whether there has been a significant increase in new coronavirus infections in the autumn and it will be possible to see if new restrictions will be reintroduced," he said.
"In general, I do not rule out anything."
Poland's central bank will not rush into any decisions about policy tightening while uncertainty caused by the pandemic hangs over the economy, its governor said last Friday.
Poland's main interest rate has been at a record low of 0.1% since May 2020.
On Monday the Polish central bank published its latest inflation report, showing a higher central path for inflation and GDP in 2021 than previously forecast.
Lon, a member of the bank's Monetary Policy Council, remarked: "I generally agree with the estimates included in the projection. But I can add that a lot will depend on commodity prices. Generally, I assume that inflationary tendencies may slow down even a bit faster than assumed in the latest projection." (Reporting by Pawel Florkiewicz, Editing by William Maclean)
