WARSAW (Reuters) - Poland's deputy prime minister accused the central bank on Thursday of stabbing the economy in the back with its interest rate hike a day earlier, calling the move a "dramatic mistake" that it hoped the bank would correct in future.
The central bank, whose independence is guaranteed under the constitution, surprised many in the market by hiking rates on Wednesday and saying it may do so again as it battles to bring down high inflation, despite signs of an economic slowdown.
The move drew a harsh rebuke from Deputy Prime Minister Waldemar Pawlak.
"Unfortunately the council stabbed our development processes in the back by totally unnecessarily and totally over-zealously raising interest rates," Pawlak told the state news agency PAP.
Poland's relatively loose monetary policy helped it log economic growth throughout the financial crisis and euro zone debt problems, allowing the government to reap higher budget revenues and tackle its deficit.
But it has also left inflation above the central bank's 2.5 percent target since late 2007, with little prospect of a fall given rising global food and energy prices.
"Another wave of the crisis is possible, and raising rates in this situation is a dramatic mistake. I hope that it will be possible to correct this decision if inflation begins to fall in the next couple of months," Pawlak also said.
Pawlak, who heads the junior coalition partner Peasants Party and also serves as the economy minister, has often commented on monetary policy in the past, but not in such harsh terms.
He was not alone in his criticism.
Finance Minister Jacek Rostowski, who in the past has generally avoided commenting on central bank policy, queried whether the bank had made the right decision.
"The constitution guarantees the full independence of the Monetary Policy Council - but it does not guarantee its infallibility," Rostowski told reporters in the parliament.
"I hope that the Council's decision will not prove wrong in a couple of months."
The government and central bank had cooperated last year to support the zloty and prevent the country's large foreign debt burden from triggering automatic budget-tightening measures.
But Rostowski upset the bank in January by calling on it to be ready to intervene in the bond market in the event of panic selling. He then said the dogma of an independent central bank was out of whack with its original purpose as a state lender.
Analysts appeared unfazed by Thursday's government reaction to the rate hike.
"Rostowski's comments were diplomatic, while Pawlak's were brutal and populist. I believe investors know the Peasants' Party tries to be very socially sensitive, which sometimes is connected with an excessive amount of populism," said Rafal Benecki, chief economist at ING Bank in Warsaw.
"This will not have an impact on government policy," he added.
Benecki also said the government was not about to embark on moves like those seen in Hungary, where the government is at loggerheads with its international lenders over moves seen as trampling on the central bank's independence.
"Poland still has high borrowing needs and the government will avoid any moves similar to the ones in Hungary, not to raise the costs of servicing the state debt unnecessarily," Benecki said.
(Reporting by Marcin Goettig; Editing by Hugh Lawson)
