Poland is witnessing a heated standoff between its centrist government and the National Bank of Poland (NBP), reminiscent of the tension between former U.S. President Donald Trump and the Federal Reserve.
Critized for Agressive Inerest Rates
According to El Economista the dispute centers on the economic policies of NBP Governor Adam Glapinski, a former ally of the opposition party Law and Justice, who has been accused of illegally purchasing government bonds and mishandling the country's inflation crisis.
Since assuming office, the new government, led by Prime Minister Donald Tusk, has criticized Glapinski for his aggressive interest rate cuts, particularly two consecutive reductions before the recent elections.
These cuts, which brought rates from 6.75% to 5.75%, have sparked concerns, especially given Poland's history of high inflation, which peaked at 14.3% last year.
Despite inflation currently being below the EU average at 2.6%, recent data showing a rise to 4.2% in July has fueled further tension.
Politically Motivated
The government argues that Glapinski's restrictive monetary policy is hindering Poland's economic growth potential. Tusk has even suggested replacing Glapinski, a move that could impact the NBP’s independence, as noted by the European Central Bank (ECB).
The conflict has broader implications for Poland’s economy. As other central banks in Europe, such as the Bank of England and the European Central Bank, have begun lowering interest rates to stabilize their economies, Poland’s refusal to follow suit may isolate it economically.
Critics within the government claim that Glapinski’s policies are politically motivated and detrimental to national interests.
Glapinski, however, remains firm, stating that interest rates are unlikely to be cut before 2026, a stance that he believes is necessary to control inflation.
