Jerzy Hausner has a message for anyone looking to translate political power into greater sway over Polish monetary policy: people entering the central bank leave their party affiliation at the door.
“The council’s members, whether named by parliament or the president, don’t represent anyone,” Hausner, an outgoing member of the Polish central bank’s rate-setting panel, said in an interview in Warsaw.
“The moment someone joins an independent institution, the person has to act in the name of that independent body.”
It’s a shot across the bow to the ruling Law & Justice party, which swept to power in 2015 with wins in presidential and parliamentary elections after eight years in the opposition. The central bank is the latest battleground in the institutional crisis gripping Poland after the new government pushed to overhaul the constitutional court, the anti-corruption agency and public media, and named a ruling-party lawmaker to lead the nation’s largest refiner.
Eight of the policy council’s 10 members will be replaced by parliament and the president in January and February, while governor Marek Belka’s term ends in June. All new rate setters will be nominated by Law & Justice, which won power on promises to boost spending and levy taxes on financial institutions. The party has said it’s seeking candidates who’ll support interest- rate cuts and wants the central bank to help spur economic growth with a programme of cheap loans.
A list of candidates proposed so far by the ruling party includes Grazyna Ancyparowicz and Eryk Lon, professors at the Katowice School of Economics and the Poznan University of Economics and Business, respectively. Among other nominees are Eugeniusz Gatnar, a member of the central bank’s management board, and Marek Chrzanowski from the Warsaw School of Economics.
Five of the outgoing council members, including Hausner, have been nominated by Civic Platform, Poland’s dominant political force for almost a decade until it was unseated by Law & Justice. The Peasants Party, which was part of a ruling coalition, proposed one candidate. Two others were named by late President Lech Kaczynski, the twin brother of Law & Justice leader Jaroslaw. Former President Bronislaw Komorowski, an ally of Civic Platform, nominated two more, including Belka.
As a debate flares over the central bank’s role in bolstering the economy, Hausner said that he sees “no reasons to stimulate economic growth.” The current pace of expansion is near its potential and needs to be maintained as long as possible to lay the ground for major structural changes to boost the competitiveness and innovation of the Polish economy, he said.
Gross domestic product will continue to expand faster than 3% after growing 3.5% in the third quarter, according to the central bank’s latest projections.
Monetary policy needs to be “conventional and conservative, having a stabilizing and not stimulating role,” Hausner said. “This is a safety-oriented policy, allowing the government to focus on economic development.”
“The central bank is a one-of-a-kind vessel and we are its crew, and we’re to lead this ship to a safe haven through the turbulent sea of the global economy,” Hausner said. “We respected all safety measures, carrying out conventional policy at the time when most banks abandoned it. In difficult moments we knew how to ensure the central bank’s independence and its credibility.”
As central banks across the world deployed unprecedented stimulus and drove rates near zero, the outgoing panel in Poland has kept its benchmark unchanged at a record-low 1.5% since March even as the country endures 17 months of deflation. Forward-rate agreements trade 24 basis points below the Warsaw Interbank Offered Rate, signalling bets by derivatives investors on almost a quarter-point of easing next year.
The central bank’s independence “serves the Polish economy well,” said Hausner, pointing to the country’s balanced growth, its resilience during global crises and the safety of its financial system. The policy-setting council has been an institution that includes “people working as independent experts, despite political nominations, in the interest of the state and the economy,” he said.
Hausner declined to comment on the future council. Whatever its eventual makeup, “each group of people taking charge of a state institution deserves a credit of trust at the beginning,” he said.