Out with the RPP says Polish PM

Prime Minister Kazimierz Marcinkiewicz repeated the view expressed by Law and Justice (PiS) a few months ago, that the central bank's rate-setting Monetary Policy Council (RPP) has to be dissolved and the proper amendments have to be introduced to the Constitution.

"This statement has not surprised investors. Still, it has introduced an element of restlessness," says Marek Węgrzanowski a financial analyst from WGI Dom Maklerski. He believes that the move is another element of the government's 'cheap state' program. The main analyst from Citibank Bank Handlowy, Katarzyna Zajdel-Kurowska, has a more radical view on such plans. "In a sense this is a coup on the central bank," she told Puls Biznesu.

"The National Bank of Poland (NBP) has to be an independent institution, but its policy has to observe the country's policy," said Marcinkiewicz in Davos, Switzerland last week, offering no further explanation of exactly what he meant.

"This is an interference in the bank's independence," says Węgrzanowski. Last week PiS announced that it could support the idea of limiting the number of RPP members and change the range of the National Bank of Poland's activities, a move which is also demanded by Self-defense.

Marcinkiewicz also believes that the central bank should cut interest rates this week, as inflation fell below one percent in December. He expects that it will not be the last decrease. "I cannot imagine that it would be otherwise. The economy is developing well but still too slowly," he said. The president of NBP, Leszek Balcerowicz, drew attention to the fact that the low inflation figures in December resulted only from two temporary factors, namely the blocked export of food to Russia and falling margins of fuel prices. "It is difficult to expect these factors to be maintained in the next months," he said.