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UPDATE 1-Poland's 2014 euro adoption is realistic-c.banker

Published 07/21/2009, 02:29 AM
Updated 07/21/2009, 02:32 AM
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WARSAW, July 21 (Reuters) - Poland will not be able to enter the ERM2 pre-euro currency corridor this year, although it is realistic to adopt the euro in 2014, a member of the central bank's monetary policy council said in a TV interview on Tuesday.

Warsaw originally hoped to adopt the common currency as of 2012, but the sharp economic slowdown has forced the centre-right government to alter the schedule.

"We were supposed to enter the ERM2 corridor this year, but today we know that because of the crisis it is impossible," Marian Noga told TVN CNBC Biznes.

Asked if Poland's euro entry could take place in 2014, he said: "I see that as realistic."

A country seeking to join the euro zone must first spend at least two years in ERM2, which pegs its currency to the euro.

Noga, who has recently shifted to a neutral bias in monetary policy from supporting further interest rate cuts, also reiterated the rate-setting Monetary Policy Council (MPC) had no more room to cut borrowing costs.

"The MPC should not change rates, this is my view. CPI will definitely ease in July and August to below the 3.5 percent in June," Noga said. "The weak zloty also helps inflation to ease to the MPC's 2.5 percent target."

Poland's central bank cut rates by 2.25 percentage points since November to an all-time low of 3.5 percent but has held fire in recent months as the economy slows. (Reporting by Gabriela Baczynska; Editing by Jan Dahinten)

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