Poland’s central bank governor reveals rate-setting plans in holiday chat

Poland’s central bank governor reveals rate-setting plans in holiday chat
A video posted on YouTube by Agrounia reveals Adam Glapinski's comments in Sopot, northern Poland. / Agrounia
By bne IntelliNews July 18, 2022

Polish central bank governor Adam Glapinski indicated the bank’s future rate-setting policy in a conversation with a woman he met on vacation in Sopot, northern Poland.

Currently, the National Bank of Poland (NBP) is tightening its monetary policy to fight inflation, which surged to 15.6% y/y in June. However, Glapinski indicated that at most one more rate hike lies ahead. 

The exchange between Glapinski and the woman, who has not been named, was filmed and a video was posted on the YouTube channel of Agrounia, a group of farmer activists. 

It shows a casually dressed Glapinski and his wife being approached by a woman, who questioned the central banker on how she will be able to repay a loan she took out two years earlier, when borrowing costs were just 0.1%. Following a series of hikes intended to rein in surging inflation, rates now stand at 6.5%. 

Glapinski responded, telling the woman how she can take advantage of Poland’s ‘credit vacation’ scheme by taking a four-month repayment holiday, Bloomberg reported. 

“You should … take one [vacation] every quarter next year and then rates will be lower,” he added during the course of their five-minute conversation.

The scheme gives mortgage holders an option to suspend up to eight monthly repayments this year and the next. 

The government devised the controversial measure to help mortgage holders cope with growing repayments after the National Bank of Poland (NBP) hiked its reference interest rate 10 consecutive times between October and July. 

It has met with fierce opposition from banks. They say that the government proposal should have been fine-tuned to help borrowers in need rather than everyone regardless of their financial situation.

“We currently have the highest interest rates and the highest inflation,” the central bank governor said. “If there is going to be one more [rate increase] it’ll only be of 0.25 [of a percentage point],” he continued. 

Analysts believe price growth in Poland has not reached its peak yet. The consumer price index (CPI) is expected to continue growth to around 16% in August, although the uncertainty as to the index’s trajectory is high.

A spokesperson for Agrounia told Bloomberg the video was recorded on the evening of July 15 and that the woman was a small restaurant owner in Sopot. However, the spokesperson did not comment on whether Glapinski knew he was being filmed.