WARSAW  - Polish central banker Elzbieta Chojna-Duch said on Monday that the country’s inflation target is too strict at 2.5 per cent and should be changed.

She told Reuters that she wanted fellow monetary policy committee members to discuss the idea at their September meeting

“I would like us to consider this. We should discuss it in September. For example, we could target a range, rather than a specific level. Or we could simply increase the target. We live in an inflationary world after all and the target makes our policy too tight, she said. Analysts expect the MPC to keep interest rates on hold at 4.75 per cent for the rest of the year because inflation, at 4.0 per cent in July, has been above the central bank’s target for most of the last five years.

The persistently high inflation forced the MPC to raise interest rates by 25 basis points in May, to the shock of the government and investors because the economy was already then showing signs of significant deterioration.

“The world is dynamic, it changes fast. And we have had the same inflation target for 10 years now. It is time to secure our credibility by ensuring our target matches the surrounding environment,” said Chojna-Duch.

, who has also been advocating lower interest rates in the last several weeks.

In fact analysts say that the European Union’s biggest emerging economy, stung by a tight fiscal policy, high interest rates and a strong zloty currency, may not be able to stay afloat in the months ahead. And even though slashing interest rates would seem to be an easy and conventional way of helping the economy, Poland’s rate-setters appear tied to their restrictive stance, particularly after the May hike.

“In an ideal world, there would have been no hike in May and the central bank would be cutting rates in September. But it’s now difficult to make such a u-turn in policy and save face,” said Maciej Reluga, chief economist at Bank Zachodni WBK. Changing the central bank’s inflation target could help the rate council ease policy faster because it would allow policymakers to accept higher inflation during the upcoming downturn.