World News | Poland's Central Bank Cuts Key Interest Rate Despite Double-digit Inflation
Get latest articles and stories on World at LatestLY. Poland's central bank lowered its key interest rate by 75 basis points on Wednesday despite the country's double-digit inflation rate. The move prompted concerns by economists that the central bank was providing an economic stimulus to help the governing party ahead of parliamentary elections next month.
Warsaw (Poland), Sep 6 (AP) Poland's central bank lowered its key interest rate by 75 basis points on Wednesday despite the country's double-digit inflation rate. The move prompted concerns by economists that the central bank was providing an economic stimulus to help the governing party ahead of parliamentary elections next month.
The National Bank of Poland's monetary policy council announced that it was cutting the reference rate from 6.75 per cent to 6 per cent.
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Economists had been expecting a rate cut given an election planned for October 15 in which the conservative governing party, Law and Justice, is fighting for an unprecedented third term. The central bank's governor is an ally of the party and has taken actions in the past to help the government.
However, the extent of the cut took economic and political observers by surprise given that inflation, while down from over 18 per cent earlier this year, is still running at over 10 per cent annually.
In conditions of high inflation, central banks tend to raise interest rates.
The Polish currency, the zloty, immediately lost value against other currencies.
The move will provide relief to Poles with mortgages who have seen their payments rise in recent times. It should also give a boost to the economy. But it risks creating even greater inflationary pressure at a time when Poles are already suffering from rising prices. (AP)
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)