Polish MPC should return to rate-hike debate, says Kotecki

FILE PHOTO: A logo of the National Bank of Poland NBP (Polish Central Bank) is seen on their building in Warsaw

WARSAW (Reuters) - Poland's Monetary Policy Council (MPC) should start discussing rate hikes again, central banker Ludwik Kotecki said on Friday, adding that talk of when borrowing costs could fall was premature.

The National Bank of Poland (NBP) left its main interest rate on hold at 6.75% for the third time in a row on Wednesday, leading economists to conclude that the tightening cycle had ended and shifting focus to when borrowing costs could start to fall.

Asked in an interview on Parkiet TV if the MPC should start talking about hikes again, Kotecki said "I think so".

"Unfortunately the peak is ahead of us. We will see the peak in February and it could be over 20% ...," he added.

On Thursday, Governor Adam Glapinski reiterated that the tightening cycle was paused, rater than definitively ended.

Kotecki, part of the hawkish wing of the MPC, said that significant depreciation of the zloty currency would be a factor that could put rate-hike talk back on the table.

"It seems to me that the awareness of this 20% inflation in February is already there, but it does not make such an impression as to cause any discussion or decision," he said.

"There is one condition that can change this - a very strong zloty depreciation."

Asked what level of rate hikes he thought would be appropriate, Kotecki said 100 basis points would be too much, while 25 would not be enough.

Inflation in emerging Europe's largest economy fell slightly to 17.4% in November from 17.9% in the previos month, statistics office data showed.

However, Kotecki said that the process of returning price growth the the central bank's 1.5-3,5% target range would be long.

"I believe that we should not celebrate disinflation too soon because there is also such a thing as inflation expectations and today they are at record levels," he said.

(Reporting by Alan Charlish, Pawel Florkiewicz, Marek Strzelecki; editing by Philippa Fletcher)