The latest decision of the Monetary Policy Council is no longer supporting the government in its distribution, it is taking part in the election campaign – said Bogusław Grabowski, former member of the Monetary Policy Council, in the “One on One” program on TVN24. According to the economist, most Council members “cared about the stability of Jarosław Kaczyński’s government.”
The former MPC member was asked for his opinion on the MPC’s recent decision to reduce interest rates by 75 basis points.
– This is the pro level (the highest level – ed.) in the politicization of the central bank and monetary policy under the leadership of Mr. (NBP President) Adam Glapiński. (…) They conducted monetary policy in breach of the constitutional and statutory mandate to ensure monetary stability. They cared about the stability of Jarosław Kaczyński’s government, supporting the government, Grabowski said.
He added that “the latest decision no longer favors demand and development.” In his opinion, this is a “policy of accommodation (in relation to) government actions” and “not promoting price stability.”
– This means that if the government wants to stimulate demand, we (the Monetary Policy Council) will not restrict it with monetary policy for the sake of price stability, but we will help. They maintained negative real interest rates (the level of rates minus inflation – ed.), and supported credit expansion. You can create the impression that there is something to spend, that there is something in this wallet, what is left from this installment, that can be spent. And if there is none, we print it just in case, just like during Covid – said a former MPC member.
According to the economist, the latest decision of the Monetary Policy Council “is no longer supporting the government in its pro-demand policy, in its distribution, in transfers” but “taking part in the election campaign.”
– After all, this rate cut will not affect the economic situation until October 15 in a way other than showing the image that the worst is behind us, Covid is over, the so-called Putin inflation is over, this double-digit (inflation) is over – he explained.
He added: – This is not part of supporting the government’s monetary policy, but supporting it in the election campaign, which is why this decision was so radical and why it met with such a shock among investors.
The reaction to the surprising decision of the Monetary Policy Council to reduce interest rates by 75 basis points was a sharp weakening of the zloty, which further increased after Thursday’s conference of the head of the NBP, Adam Glapiński.
Inflation and interest rates in Poland
During its September meeting, the Monetary Policy Council (MPC) decided to reduce the NBP interest rates by 75 basis points. This means that the reference rate will drop to 6.00 percent.
Most economists of the largest banks in Poland expected a reduction in interest rates, but on a smaller scale – by 25 basis points.
Interest rates and inflation in PolandPAP
Data from the Central Statistical Office show that the prices of consumer goods and services in August 2023 increased by 10.1%. compared to 10.8 percent y/y in July. The market expected the August inflation reading to be 10.0%.
The inflation target of the Polish central bank is 2.5%. with a deviation range of +/- 1 percentage point.
photo-source">Source of main photo: TVN24
2023-09-15 07:13:03
#Shocking #decision #Monetary #Policy #Council #cared #stability #Jarosław #Kaczyńskis #government
/data/photo/2023/09/15/6503a393c320c.jpg?resize=150%2C150&ssl=1)