Fight against inflation must be a priority, but it is not
19:02
The increase in interest rates by the Monetary Policy Council did not surprise anyone. In the coming months, the MPC will perform a few more similar movements, writes Witold Gadomski in commentary for Wyborcza.biz.
We do not know to what level the rates will eventually be raised. It should be recalled that when inflation started to rise in mid-2000 and reached 11,6 percent in July, the Monetary Policy Council raised the refinancing loan rate to 24 percent. A year later inflation fell below 5 percent, but the economy was strongly hampered.
"Much will depend on external factors – the price of energy raw materials on world markets, but also on government policy. It has little impact on the price of oil and gas, expressed in dollars, but it can affect the rate of the zloty to the US currency, closing the dispute with the European Commission and absorbing billions of euros from European funds. Strengthening the zloty would alleviate the effects of high energy commodity prices. The government can – and should – stop the pursuit of the prices and incomes of the population. This is a difficult task, because the government controls wages only in the budgetary area, as well as the minimum wage and social benefits," he said.
In his opinion, the inhibition of income growth in high inflation is very unpopular and contrary to the government's policy to date, which gave money with a generous hand. Therefore, the publicist doubts that the government should turn its money off. The government project plans to reduce the lowest PIT rate by 5 percentage points from July 1. This will be another powerful inflationary impulse.
