Finance Ministry and NBP begin to differ on path into the euro-zone

Differences among policymakers on making the tough transition to EU and euro-zone membership broke out into the open yesterday over how and when to ditch the country's free floating currency. A senior Finance Ministry official announced plans to buy hard currencies on the forex market to fund foreign debt costs, a move aimed at curbing the strength of the zloty, but which runs counter to the National Bank's (NBP) non-interventionist stance. The NBP answered this by saying in a statement that it may introduce a zloty trading band - a step already taken by Hungary which anticipates locking into an exchange rate prior to adopting the euro. "The NBP does not rule out the possibility of conducting both a policy of direct inflation targeting and introducing a wide range of acceptable zloty volatility set around a market-established parity rate," read the statement. But it was quickly shot down by two Monetary Policy Council (MPC) members, setting the scene for a possible flare-up of hostilities between the government desperate to revive growth and die-hard central bank hawks. MPC members Grzegorz Wojtowicz and Boguslaw Grabowski said the zloty should remain free floating until the country formally joins the Exchange Rate Mechanism (ERM-2) after its a ccession to the EU. (Reuters) A.K.