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Do you need to raise interest rates? Dr. Małgorzata Starczewska-Krzysztoszek and Ryszard Petru comment

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Interest rates definitely need to be raised, said economist Dr. Małgorzata Starczewska-Krzysztoszek, University of Warsaw, Society of Polish Economists in “Fakty po Faktach” on TVN24. In turn, Ryszard Petru from the Institute of Liberal Thought said that “we will not win against inflation with Glapiński”.

Interest rates have remained unchanged since September 8, 2022. However, during the May meeting of the Monetary Policy Council, there were two motions for rate hikes. The MPC again rejected motions for an interest rate hike by 100 and 25 basis points. Only Joanna Tyrowicz voted for the motion for an increase of 100 basis points. The motion for an increase of 25 basis points was supported by Ludwik Kotecki, Przemysław Litwiniuk and Tyrowicz, the NBP informed.

Interest rates – do they need to be raised?

When asked whether interest rates need to be raised, Dr. Starczewska-Krzysztoszek replied: – Definitely yes. You have to remember that inflation it is not just reducing our real income. So what if our income is nominally growing, our employers raise our salaries, since we go to the store and we have to spend much more on shopping than we used to spend? Our savings, if we have them, their real value also decreases.

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– Of course, higher interest rates affect those who have loans and have high installments and interest to pay, but they are much less than all those who shop – emphasized the economist.

She added that “we have to raise rates painfully” to shorten the period in which we will have to deal with very high prices. – We still have to raise interest rates, which the Monetary Policy Council is not doing. It seems to me that there is a clear political context for these decisions – she said.

When asked what politicians should do about inflation, Petru replied: – First of all, we won’t win against inflation with (NBP President Adam – ed.) Glapiński, that’s what I said. (…) Poland is sick, it is sick with inflation, it is sick with nepotismsuffering from debt. If we want to cure our country, the question is whether we will treat with herbs or use strong therapy. I am an advocate of strong therapy: an increase in interest rates.

MPC decision – June 2023

At the last meeting (June 5-6) the MPC also did not change interest rates. Thus, the main NBP interest rate, i.e. the reference rate, is still 6.75 percent, the deposit rate is 6.25 percent, the Lombard rate is 7.25 percent, the discount rate is 6.85 percent, and the rediscount rate is 6.80 percent. The June meeting was the ninth in a row when the MPC did not change interest rates.

interest rates [czerwiec 2023 r.]PAP

The next MPC decision-making meeting will be held on July 5-6.

Main photo source: tvn24

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