Litwiniuk of the MPC says that the Polish budget could make it harder to control inflation.
Warsaw (Reuters) – Przemyslaw Litwiniuk, a member of the Monetary Policy Council (MPC), said on Saturday that it will be hard to bring Poland’s inflation down to where the central bank wants it to be in the next two years if the government works harder to boost consumption.
Last month, the government announced a plan to help people who are having trouble paying their mortgages because rates are going up and inflation is at its highest level in more than 20 years. Poland has also cut taxes on energy to help people deal with the effects of higher prices.
“(Meeting the inflation target) depends on budget policy. If we keep transferring money from savings to spending, it will be very hard to reach the inflation target. Even if rates go up to the real interest rate, that won’t change, “Litwiniuk told the TV station TVN24.
Litwiniuk, a university professor who was appointed to the MPC in January, said that Polish inflation might stay high until 2025 because of campaigning for general elections in 2023.
Poland’s central bank started to raise interest rates in October, which was later than in the Czech Republic and Hungary. Its main interest rate is currently 5.25 percent, and inflation in April was 12.4% year on year. The central bank’s target for inflation is 2.5 percent, with a +/-1% tolerance.
The mortgage plan would let people pay back some installments without paying interest. It would also put 3.5 billion zloty from the profits of commercial banks into a fund to help people.
