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The world media is commenting on the decision of the Monetary Policy Council to significantly reduce interest rates

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“It’s like a shot from a bazooka” – this is how the Bloomberg agency comments on the interest rate cut in Poland. Other economic media around the world also write about the surprising decision, wondering how it will affect Poland’s economic situation, especially in the context of the upcoming elections.

The Bloomberg agency compares the suddenness of the NBP’s move to “a shot from a bazooka”. The Associated Press writes that the sudden cut in interest rates “has raised concerns that the central bank is stepping into politics to help the populist ruling party ahead of next month’s parliamentary elections.” The foreign economic press writes about a “shocking decision” and a policy completely different from other countries in the region.

The fight against inflation and the upcoming electionsTVN24

Czech tactics

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– Let’s look at the Czechs. This is a very important comparison. This is a society from which we can learn a lot. Czech society expects low inflation and a stable exchange rate from the central bank. He is afraid of premature interest rate cuts. And that’s what central bankers do there. It seems to me that Czechs look a little further than us. Let us remember that they are richer and more developed than us. And it is worth learning from them, says Rafał Benecki, chief economist at ING. The head of the Czech central bank, Aleš Michl, said in one of his interviews that he was not even thinking about reducing interest rates because “low inflation is the foundation of a healthy economy and mutual trust between people and companies.” Aleš Michl, unlike the head of the National Bank of Poland, is willing to admit that inflation in his country is not only the fault of the war. “Two-thirds of last year’s inflation came from imports (…) Now it’s a different story. The goal is to avoid pouring excessive amounts of cash into the economy,” he said.

The lower interest rates, the more money is poured into the economy, which increases inflation. The gap between the policies of the Polish and Czech central banks is staggering. The Czechs already brought inflation below 9 percent in July. Despite this, their main interest rate is still higher than Poland’s. – You can see that they are fighting inflation with the greatest determination. They are most aware that inflation simply destroys the economy and it needs to be brought down to a rational level as soon as possible. And they believe that their economy is strong enough – explains Maciej Samcik, author of the blog “Subiektywnie o finance”. – No one simply asks what will happen next year. The only important thing is what will happen until October 15 – says Professor Witold Orłowski, Vistula Academy, Warsaw University of Technology.

Optimistic conference of the President of the National Bank of Poland.  Adam Glapiński announced the end of double-digit inflation

Optimistic conference of the President of the National Bank of Poland. Adam Glapiński announced the end of double-digit inflationJacek Tacik/Fakty TVN

Hungarian variant?

If we treat the NBP’s decision as a political handout, the risk of a repetition of the Hungarian scenario increases in Poland. Before the 2022 elections, Viktor Orban was giving away money extensively. For fear of losing support, he froze the prices of many basic products. Then came the economic yo-yo effect. – In my opinion, this will happen to Poland. Because we feel the same way. We have temporarily reduced VAT, we have frozen gas and electricity prices, we also have central price control – explains Dr. Sławomir Dudek, president of the Institute of Public Finance.

The Hungarian economy has still not been able to return to relative balance. Inflation is still the highest in the European Union, which results in high interest rates. The average Hungarian pays more than twice as much interest on a loan as the average Pole. Viktor Orban announces single-digit inflation in the fall, but at the same time he plans to increase excise duty on fuels from the beginning of 2024, which may increase their prices in Hungary – even to the German level. Orban blames his problems not on Putin, but on Brussels and the entire West.

Facts about the World TVN24 BiS

Main photo source: tvn24



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