Polish leftist MP wants to change c.bank charter

- Central Banking staff
- 13 Feb 2001

A senior deputy from the ex-communist SLD social democrats, the party expected to win upcoming parliamentary elections, said the central bank's charter should be changed, a newspaper reported on Feb 13, 2001. Marek Borowski, SLD's deputy speaker of the lower house of parliament, was quoted as saying by the Gazeta Wyborcza daily that the government, not the central bank, should set the end-year inflation targets, as was the case in Britain. His comments drew outrage from members of the central bank's Monetary Policy Council (MPC), who said such a change would infringe on the central bank's independence.

"In some countries the government sets inflation targets and then the central bank is not wholly independent but rather operationally independent," Borowski said, adding that this was his personal opinion. In past weeks, several members of the leftist SLD have signalled that they may change the central bank's charter after elections, due by October 2001.

In past months Poland's MPC has come under increasing political pressure to lower interest rates to rekindle economic growth. The MPC now sets end-year inflation targets as well as a mid-term inflation target. It wants to lower price growth to between 6-8 percent by December 2001 and below four percent by 2003. Inflation stood at 8.5 percent year-on-year in December 2000.

Under Polish law the 10-member MPC, a body picked by politicians for six-year terms, solely sets monetary policy and co-decides on exchange rate policy with the government.In a recent interview with Reuters, central bank and MPC chief Leszek Balcerowicz said independence of Poland's monetary authorities was well established.

Source: Gazeta Wyborcza

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