Sunday, January 16, 2011

Monetary Policy Chillin'

Irie, man. Life's good when all you have to do is chillaxe at a monthly meeting, say a bit of bunk to the hounddog reporters, it doesn't really matter what, and then go home to count up the lucre, a lot of lucre.

One can almost hear Poland's rate-setting Monetary Policy Council saying the above words as it ponders a, er, lazy-faire policy.

Nine of its 10 members were all appointed to very well-paying, super prestigious jobs in early 2010 and proceeded to basically do nothing for 12 months. Tragedy reared its always ugly head in April with the death of the former chairman Slawomir Skrzypek, leading to the naming in June of the current chairman Marek Belka.

The MPC noobs have mistepped along the way. One member released information that technically she should not have regarding the result of a vote. Another member staged a hissy fit, didn't show up at a couple of meetings, later took a very hawkish voting position and incomprehensivly reversed it. This has even led some to posit whether this is the Worst Monetary Policy Council Ever?

Another question is whether this is the laziest council ever? Whereas previous incarnations sat once a month to discuss the level of interest rates, the current bunch last year decided to take a summer vacation. Though money may never sleep, clearly interest rates can't be changed in August. Irie, man.

The current gang is also bringing forward in March the rate-sitting session from the last Wednesday of the month to early in the month. This means it is dropping the February sitting. It traditionally avoids taking decisions for the festive December sitting, meaning in 2011 it will decide interest rates only 9 of the 12 times. MPC members also have a media blackout the week before a sitting and in the week after a sitting.

Naturally, rate-setting is not a matter of the quantity of sittings, but the quality of decisions. And at long last the sitting set for Jan 19 will finally see the council spring into action and nearly everyone expects the council to hike rates by 0.25 percentage points to 3.75%.

Whether this council is the laziest or the worst remains to be seen. The easy part of settling in is over. Now comes the hard part of trying not to make a hash of the job.


  1. Hi Scott, I was wondering where you got the information regarding the National Bank of Poland MPC blackout week? Would appreciate it if you could share the source.


  2. It's just standard known practice agreed by the previous MPC, as far as I remember. There was to be a blackout after the sitting, but I don't think this was ever followed.