Professor Anceparowich: Keep the government out of the bank's financial policy

According to the preliminary reading of the Central Statistical Office, the consumer price index inflation in Poland in January this year. It decreased to 3.9 percent. If these trends continue, we may reach our inflation target as early as March. However, the lasting decline in inflation will be hampered by the jump in energy prices following its release in June and the elimination of the zero value-added tax on food, which could be very painful.

In my opinion, inflation is likely to return to the inflation target permanently in June or perhaps July next year. Even assuming a mid-year energy price shock, we will eventually come down this inflation hill

– said the professor in the economic interview on TV in Poland. Grazyna Anceparoicz, former member of the Monetary Policy Board.

In an interview with Maciej Walko, the economist admitted that it is not time to open the champagne yet. The shields introduced by the previous government are still in effect, as we face increases in energy prices and the removal of exemptions, such as the elimination of the value-added tax on food.

It can be assumed that there will not be a major shock if VAT on food is reinstated, although it is difficult to predict anything until we know what the entire VAT matrix will look like. Given the current state of knowledge, the Polish National Bank has estimated that we can expect an increase of about 1%. Therefore, if we say that we will be within the inflation target in March, after the increase we will still be at the upper end of the target at 3.5%. On an annual basis

– said the economist.

But after the increase in energy prices, we must take into account an increase in inflation by 4-5 percentage points. This means that we can expect the inflation rate at the end of the year to reach 7-8%. Although the average annual reading will be lower.

NBP's outlook is good

On Monday, National Central Bank Vice President Marta Keightley, in a comment to PAP Biznes, stressed the importance of positive inflation data in January.

This is a huge success, especially when we consider the scale of the shock we have faced in recent years. Let me remind you that in February 2023, inflation, largely caused by the effects of external disturbances, including those associated with the Russian attack on Ukraine, reached 18.4%. The next 11 months saw a clear gradual decline. As a result, the dynamics of the CPI in January was about 5 times lower than at the peak in 2023.

– wrote the Vice President of the Polish National Bank.

The good monetary policy of the Polish National Bank also plays an important role in lowering inflation, as it limited second-round effects and prevented inflation from remaining at a high level. Please note that core inflation (i.e. inflation excluding energy and food prices) has declined significantly since March last year. Today we know that in December it was 6.9%, so it was 5.4 points higher. A percentage lower than in March of last year As for January, we don't have a reading on this inflation measure yet, but it is likely – like other major components of CPI inflation – that it has fallen again.

Kightley explained.

The professor pointed out these words. Ancyparowicz, stressing that it is very good that the current NBP forecasts and forecasts made in post-pandemic conditions are confirmed.

This is proof that there are no better forecasts than those provided by the Polish National Bank. It turned out to be better than the expectations of the International Monetary Fund or commercial banks. There will be a new forecast for March soon and I think the inflation panic that was used so effectively last year to attack the Chairman of the National Bank of Japan personally, is becoming evident. Either someone was a local fortune teller looking at the ceiling, or went to a fortune teller, or it was a deliberate misinformation, deception and intimidation of Polish society. I can't judge the motives of the people who said that

– said the professor. Ansibarwich.

The attack continues

It seems that inflation is declining, thus confirming the good monetary policy pursued by the Monetary Policy Council and the Head of the National Bank, Prof. Adam Glabinski will help curb the desire to attack the head of the Polish Central Bank. Meanwhile, at the beginning of the week, Bloomberg reported that Donald Tusk was going to give the green light to remove Adam Glabinski from the Polish National Bank. This involves filing it before a state court.

Attacks on the Chairman of the Philippine National Bank were, and continue to be, originating, perhaps, from circles linked to the capital market. Moreover, no action has been taken to change the provisions in the Polish National Bank Act and several other laws, which conflict with the independence of the Central Bank. It contravenes our Constitution, the Maastricht Treaty, the Lisbon Treaty and the statute of the European System of Central Banks. They may have been retained in order to influence the National Bank of Japan's employment and monetary policy, with apparent independence guaranteed by the constitution.

– said the economist.

Independence of the Polish National Bank?

Professor Grażyna Ancyparowicz lists at least three provisions of the National Central Bank Law that conflict with the right to independence of the Central Bank. These provisions relate to the appointment and dismissal of the President of the European Central Bank, which the ECB has repeatedly pointed out to the Polish authorities. The second contradictory condition is Article 24, which relates to currency and exchange rate policy and the obligation to consult with the government on monetary policy, whereby the National Bank of Japan is supposed to follow an independent currency and exchange rate policy.

I wanted to ask how the National Bank should implement the Prime Minister's instructions in this regard? But that's what the law says. And if someone wants, he can build different things on this basis, for example, enter the profit that the National Bank of India will make to its balance sheet. Then the politicians, who do not really understand the central bank's accounts, accuse that the TNB acted at the expense of the budget by shifting from an alleged $6 billion surplus to a deep deficit. This is not the first year that the National Reserve Bank has recorded a deficit. We have a negative financial result if the Polish currency strengthens. Think no one cares about having junk currency? Well, unless no one cares, because then it would be possible to introduce the euro and say that the Polish National Bank is completely ineffective

The economic intelligence guest asked.

The third area that requires changes in regulations is, according to the professor. Ancyparowicz stipulates in Article 68 that the report must be submitted to the Prime Minister for approval.

What does the Prime Minister have to do with the matter? We are an independent institution, have our own assets, pursue an independent policy in all respects, and the government and politicians are not responsible for the financial policy of any bank. This is a road that leads nowhere, leading to hyperinflation, misery, and economic crises

– the economist said directly.

Watch the entire conversation in Economic Intelligence:

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