WARSAW, Jan 19 (Reuters) - Bringing Polish inflation down to the level required for euro adoption will be easier than pushing the fiscal deficit below 3 percent of gross domestic product, central bank head Slawomir Skrzypek was quoted on Tuesday as saying.
Warsaw aims to adopt the euro as soon as possible, but the economic slowdown has pumped up the budget deficit while inflation did not ease. This had put Poland in breach of all but one of the European Union's criteria for euro entry.
'Bringing inflation to the level required by the Maastricht criteria will not be a problem,' Skrzypek told daily Dziennik Gazeta Prawna in an interview. 'It will be much harder to bring the general government deficit down to below 3 percent of GDP.'
A country wanting to adopt the common currency must prove it can sustainably keep inflation at no more than 1.5 percentage points above the average of the three lowest inflation rates in the now 27-nation European Union.
Inflation in Poland stood at 3.5 percent in December, above the central bank's 2.5 percent target. Its December HICP inflation used for euro zone entry purposes stood at 4.0 percent, while five EU members actually experienced falling prices.
Warsaw now sees the 2010 general government deficit at below 6 percent, almost twice as much as the 3-percent ceiling for euro zone aspirants. Brussels forecasts the deficit to reach 7.5 percent.
Asked about the likelihood that the new Monetary Policy Council (MPC), due to be complete in February, will raise interest rates, Skrzypek said: 'We should always keep in mind the impact of central bank decisions on economic growth.'
'A series of rate cuts was a substantial pro-growth boost for the economy.'
Poland was the only European Union member to avoid recession last year and analysts see growth at 1.6 percent in 2009 and 2.6 percent in 2010.
'The crisis has for sure entered a milder phase and its end seems to be drawing closer ... I believe ... that the stability of Polish economy will be gradually strengthening,' Skrzypek said.
(Reporting by Adrian Krajewski, writing by Adrian Krajewski and Kuba Jaworowski; Editing by Ruth Pitchford) Keywords: POLAND DEFICIT/ (adrian.krajewski@thomsonreuters.com; +48 22 653 9709; Reuters Messaging: adrian.krajewski.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Warsaw aims to adopt the euro as soon as possible, but the economic slowdown has pumped up the budget deficit while inflation did not ease. This had put Poland in breach of all but one of the European Union's criteria for euro entry.
'Bringing inflation to the level required by the Maastricht criteria will not be a problem,' Skrzypek told daily Dziennik Gazeta Prawna in an interview. 'It will be much harder to bring the general government deficit down to below 3 percent of GDP.'
A country wanting to adopt the common currency must prove it can sustainably keep inflation at no more than 1.5 percentage points above the average of the three lowest inflation rates in the now 27-nation European Union.
Inflation in Poland stood at 3.5 percent in December, above the central bank's 2.5 percent target. Its December HICP inflation used for euro zone entry purposes stood at 4.0 percent, while five EU members actually experienced falling prices.
Warsaw now sees the 2010 general government deficit at below 6 percent, almost twice as much as the 3-percent ceiling for euro zone aspirants. Brussels forecasts the deficit to reach 7.5 percent.
Asked about the likelihood that the new Monetary Policy Council (MPC), due to be complete in February, will raise interest rates, Skrzypek said: 'We should always keep in mind the impact of central bank decisions on economic growth.'
'A series of rate cuts was a substantial pro-growth boost for the economy.'
Poland was the only European Union member to avoid recession last year and analysts see growth at 1.6 percent in 2009 and 2.6 percent in 2010.
'The crisis has for sure entered a milder phase and its end seems to be drawing closer ... I believe ... that the stability of Polish economy will be gradually strengthening,' Skrzypek said.
(Reporting by Adrian Krajewski, writing by Adrian Krajewski and Kuba Jaworowski; Editing by Ruth Pitchford) Keywords: POLAND DEFICIT/ (adrian.krajewski@thomsonreuters.com; +48 22 653 9709; Reuters Messaging: adrian.krajewski.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.