"There was a phone call from the government behind the decision to cut NBP interest rates."

Central banks all over the world are printing money massively and lowering interest rates. NBP is no different. A well-known economist [...] https://www.pinterest.com/pin/1085437947660215829/

Central banks all over the world are printing money massively and lowering interest rates. NBP is no different. A well-known economist and former prime minister believes that in this particular case, however, the decisive factor was a "phone call from the government. NBP and interest rates - I think that the decision to cut the NBP interest rates was made by a phone call from the government," Marek Belka, the former president of the NBP, former prime minister and finance minister, said in an interview with Business Insider Polska. - Such a model of independence of the National Bank of Poland is now in force in our country," he added. He adds that "the decision is at least surprising. Astonishing and not good." "It threatens financial stability in our country. I mean primarily a drastic deterioration in the situation of cooperative banks and smaller, weaker commercial banks. They may not be able to withstand such a reduction in business profitability. I also do not understand, or rather see any substantive reasons that could support the decision to cut rates. Inflation, though falling, remains relatively high. The zloty has weakened, although it still retains a surprising resilience to yesterday's move by the MPC. I think there was a call from the government behind the NBP rate cut decision," - says the economist. In his opinion, the policy of the Monetary Policy Council is not fully clear." "We do not fully know what rationale the Monetary Policy Council followed. For two months, apart from the official announcement, we have not had a press conference after the Council's meeting. So it is hard to form an opinion about how the MPC members assess the impact of the pandemic on the Polish economy." Politicians and the currency Thus, Belka raised a very important issue: the dependence of central banks on politicians. Anyway, the same can be seen in the US, where the head of the Fed is only formally not subordinated to the president of the country. In practice, he conducts the monetary policy that the occupant of the White House wants. It is no secret that Donald Trump has been pressing Jerome Powell to cut interest rates in the US for months. What is 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. (...) On the other hand, cutting interest rates lowers the already low propensity of economic agents to accumulate money on lower and lower interest-bearing bank deposits. This will stifle economic growth. After all, commercial banks can only lend what they gather from the market. In Polish conditions, deposits are the main basis for granting credits. When savings, due to the negative real interest rates which we have been dealing with for a long time, start to flow out of the banking sector, the activity of banks in the field of financing the economy will slow down even further." Tags NBP pln MPC