National Bank of Poland to release interest rate decision
The National Bank of Poland is set to release its interest rate decision today. Rates are likely to remain at 0.1% where they have hovered over the past five months.
Although the national budget was amended to allow for a 4.6% contraction in GDP, experts predict only a 3.5% shrinkage, largely owing to the government’s $55 billion stimulus package. The $26 billion Financial Shield Programme, in particular, provides loans to struggling small to medium-size enterprises and is intended to stabilise the economy by 2022.
While Poland’s domestic efforts are robust, expect it to rely still on the gargantuan 2021-2027 EU stimulus package worth $2.1 trillion. However, tensions have grown between Poland and the EU. A new European Commission report highlighted Poland’s deficiencies in its democratic institutions, raising concerns over the EU’s allocation of resources to nations that do not uphold its norms. If Brussels remains firm in its decision to tie the fiscal stimulus to its constituents’ ability to reflect its ideals, it will likely alienate increasingly authoritarian members like Poland and Hungary, stalling the economic recovery process. But if Brussels caves and dilutes its stipulations, it may end up trading financial stability in the short-medium term for dangerous democracy-erosion in its member states.
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