Bank head Belka losing influence in rate-setting?

Photo: wikipedia/A. Barabasz

Bloomberg reports that at least one member of the RPP, Jerzy Hausner, is not on speaking terms with the Central Banker. Economist Hausner was one of the people personally slurred in the leaked tape.

The repercussions are being felt by economists and investors, as many are unsure how the NBP will proceed with its policy on interest rates.

“Given the level of animosity against him by some members, there has been a total breakdown of the governor’s normal role, which is to form consensus, steer discussions, establish a framework,” a Nomura International emerging-markets strategist, Peter Attard Montalto, told Bloomberg.

“That’s where it’s gone wrong.”

While Belka has often said that there should be more, regular rate cuts this year, the RPP – which has the final say – has only slashed them once, in October by 50 bp. The rate now stands at a record-low two percent.

“It’s a dangerous situation,” Michal Dybula, an economist at BNP Paribas told the agency.

“The setup now is that Belka doesn’t control or exert serious influence over the [RPP]. That means its decisions are governed by the fickle reaction functions of individual members, rather than by the condition of the economy.”

Marek Belka has more than 18 months left in his post. (rg)