Central banks around the world today are printing money and lowering interest rates. The NBP operates no differently. A well-known economist and former prime minister believes that in this particular case he was decisive “Government call.”
NBP and interest rates
– I think that the government’s phone call was behind the decision to lower the NBP interest rates – He said in conversation with Business Insider Polska Marek Belka, former President of the National Bank of Poland, former Prime Minister and Minister of Finance. – This model of independence of the National Bank of Poland is now in force in our country – he adds.
He adds that “The decision is at least surprising. Amazing and not good. “
“It threatens financial stability in our country. I mean above all drastic deterioration of the situation of cooperative banks and smaller, weaker commercial banks. They can not withstand such a reduction in the profitability of business. I also do not understand, or rather I do not see substantive reasons that could support the decision to cut rates. Inflation, although falling, still remains relatively high. The zloty weakened, although it still retains amazing resistance to yesterday’s MPC move. I think that the decision to lower the NBP interest rates was a phone call from the government “
– says the economist.
In his opinion, the policy of the Monetary Policy Council is not fully clear. “
“We do not quite know what reasons were followed by the Monetary Policy Council. Apart from the official announcement, we have not had a press conference after the Council meeting for two months. So it’s hard to form an opinion on how MPC members assess the impact of a pandemic on the Polish economy. “
Politicians and currency
Belka thus raised a very important topic: the dependence of central banks on politicians. Anyway, the same can be seen in the USA, where the Fed head is only formally not subordinated to the president of the country. In practice, he pursues the monetary policy that a White House resident wants. It is no secret that Donald Trump has been pressing Jerome Powell for months to cut interest rates. in Usa.
What’s worse, according to Belka, this type of policy will not help our country at all:
“In Poland, the lack of cheap money was not and is not a problem. (…) However the interest rate reduction lowers the already low tendency of economic participants to accumulate funds at ever lower interest-bearing bank deposits. It will strangle the economic growth. Commercial banks can only borrow what they accumulate from the market. In Polish conditions, deposits are the main basis for granting loans. As savings due to real negative interest rates, which we have been dealing with for a long time, start to flow away from the banking sector, the activity of banks in the field of financing the economy will further slow down. “