Krzysztof Rybiński: The role of the EURO for the future of Poland Speech by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the International Conference “The role of the EURO for the future of Poland”, Warsaw, 15 June 2007. *  *  *  Only a few months ago the eurozone was enlarged for the second time. Slovenia became the first of the twelve new member states of the EU and the thirteenth country to adopt the common European currency. Now two other countries, i.e. Malta and Cyprus, are knocking on the euro’s door, and others are lining up for the “monetary club membership”. This seems to be a good occasion to return to the, once lively, discussion about the advantages and disadvantages of joining the monetary union. Indeed, there are still more reasons to come back periodically to the euro cost & benefit debate, since we have more and more data, the world changes rapidly and even economic theory is subject to evolution. Let me illustrate this with one example. It has long been a widely accepted view that asymmetric shocks are the biggest threat to currency unions. Nowadays some respected economists think it may not be the case.
However, worse than expected outcomes regarding unprocessed food prices and ongoing supply-side structural problems led to an upward revision in the assumption for food inflation from 7 percent to 9 percent for 2010, which added 0.55 percentage points to end-2010 inflation forecast (Table 2). Similarly, assumptions for 2011 food inflation have been raised to 7 percent from 6.5 percent, and 7 percent from 6 percent for the following years (Table 2). At this point, I would like to highlight that the recent measures regarding meat prices posed a downside risk especially for our assumption on food prices in 2010. In the previous Report, the impact of the tax measures implemented in January on fuel, alcohol, and tobacco products on 2010 inflation were estimated to be around 1.5 percentage points. However, the realization was 1.9 percent, partly reflecting the change in the weighting  scheme of the CPI, and thus shifting the inflation forecast path by around 0.4 percentage points throughout 2010. Here I would like to particularly underline once more that the impact of the tax hikes would disappear at the beginning of 2011. Regarding fiscal policy, it is assumed that, in line with the Medium Term Program, the fiscal stance will remain expansionary – but less so than in 2009 – throughout 2010, and that fiscal consolidation would gradually ensue starting from 2011 as guided by the fiscal rule set out in the Medium Term Program.