Poland’s central bank lowered interest rates by 75 basis points. From 6.75% to 6%: a move in contrast with the ECB’s monetary policy despite the fact that inflation stands at around 10%. The measure, according to the opposition, comes to the rescue of the ruling party ahead of next month’s parliamentary elections. Never underestimate the unintentional consequences.

The Polish currency, the zloty, immediately lost value against the dollar and the euro. Economists expected a rate cut, but not as broad. That is why they were surprised by such a reduction. Also inflation, after reaching 18% at the beginning of 2023, is still in double digits.

Poland’s economy is showing signs of slowing down and on October 15 citizens will go to the polls, with the Law and Justice party seeking a third term.

Marek Tatala, vice president of the Free Market Economic Freedom Foundation, explained that Narodowy Bank Polski cut rates even though inflation “is four times higher than the 2.5% target”, accusing members of the central bank’s monetary policy council of campaigning on behalf of the government’s list.