In the spotlight: Slawomir Skrzypek, president of the National Bank of Poland (NBP)
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In the spotlight: Slawomir Skrzypek, president of the National Bank of Poland (NBP)

What are the main tasks to ensure the Polish economy continues benefiting from membership of the EU?

What is the most important for me as the chairman of the Monetary Policy Council is to maintain price stability and continued strong economic growth. After a period of instability, inflation is now back on target, which is the desired result from the monetary policy point of view. The main contributors to the situation were fuel and food prices, while domestic demand only moderately increased prices. According to our analysis for the remainder of 2007, inflation will be oscillating around target, and this is in line with monetary policy in Poland. Currently, the most important task seems to be to anchor public expectations regarding inflation on a level that favours further inflation stabilization close to target.

What are the main upside risks for inflation in Poland, and do you think they are contained by interest rates at their current level?

At the moment the inflation risks are stabilized, and it does not seem that the annual CPI index will increase above 3.5% over the next few years. The great unknown is changes in fuel and food prices. If monetary policy is ineffective because of short-term supply shocks, and this becomes a long-term negative tendency, it may be a challenge for the monetary authorities not only in Poland but also in the whole world. 

You have asked a committee to report on the advantages and disadvantages of Eurozone entry: when do you expect this report to be delivered to you? Will its conclusions be made public?

The report should be drawn up by the end of 2008, as the government has pledged to meet the Maastricht criteria in 2009. The conclusions of the report will be made public, and I would like the outcome to be a catalyst for a wide factual public discussion about costs and advantages of introducing the euro. It is my intention to involve as many public bodies as possible in the drawing up of this report.  

If Poland joins ERM-II in 2010 after meeting the Maastricht criteria in 2009, are you confident that the central bank will be able to manage the narrow exchange rate band while keeping inflation on target at the same time?

Currently Poland has already fulfilled inflation and interest rates criteria. The NBP has done its job, and it will continue to do so. In addition to that, we will observe other countries and their experience in the process of implementing this system. We are analyzing costs and benefits in depth. At the moment, it is difficult to predict what will happen to the zloty in this system. Participation may mean substantial costs, for example, those that can result from currency speculation and countervailing central bank currency interventions, which may not even be sufficient. 

Do you think that high levels of emigration from Poland pose a risk for the labour market, skills shortages and upward pressure on wages?

Contrary to our experience in previous decades, the current emigration process is two-way. Many Poles who have decided to emigrate are coming back to Poland with new skills. Of course, emigration contributed to the increase of pressure on wages, but it is the levelling out of earnings that is one of the important elements of our convergence with the European Union. The key factor for monetary policy is the dynamism of the wage increases, which are currently about 10% annually, and do not translate into the CPI index. Businesses do not indicate that it is an important factor.  

There was a degree of controversy surrounding your appointment as governor. Do you worry that this will undermine the credibility and work of the national bank, especially in the context of the general election?

I can only answer that the central bank’s independence is written in the constitution. As president of the NBP, I act independently from the current political situation, and I would like the results of my work to be the best evidence and base for any eventual judgment.

—Interview by Philip Alexander

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