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Central Banks of Poland and Romania Stand Firm Amidst Economic Uncertainties


Lauren Miller

April 4, 2024 - 04:55 am


Central Banks of Poland and Romania to Maintain Interest Rates Amid Economic Challenges

As the global economy experiences shifts and changes, the central banks of Poland and Romania stand firm on their monetary policies, choosing to keep interest rates steady. This comes amidst a period of moderating inflation that has seen policymakers deliberate extensively over potential fiscal stimuli that could influence pricing levels in their respective countries.

Polish and Romanian Central Banks' Stance on Rates

According to recent surveys conducted by Bloomberg, it is anticipated that Poland's central bank will preserve its benchmark rate at 5.75% this Thursday. Simultaneously, Romania is not expected to begin its forecasted easing cycle and will instead maintain its rates at 7%. These unanimous predictions reflect a cautious approach by economists who believe that both countries will refrain from adjusting their rates for the time being.

Prospects of Policy Changes in Poland and Romania

Poland's central bank, under the governorship of Adam Glapinski, has firmly stated that there will be no rate cuts until the year's end. On the other hand, Romania's head of monetary policy, Governor Mugur Isarescu, hints at a different trajectory. Romania may follow the path of regional peers and consider cutting rates as soon as May. However, the potential adjustments will be examined with a watchful eye on regional dynamics, particularly Poland's rate decisions.

Glapinski's tenure has not been without controversy, as he now faces a probe amid allegations of political bias. The Governor is likely to face inquiries at his news conference on Friday, specifically about his steadfast perspective that borrowing costs will remain unchanged in the foreseeable future. This inquiry comes after a surprising deceleration of Polish inflation to 1.9% in March.

In stark contrast, Romanian policymakers present a scenario where they have more leeway to navigate. Fiscal pressures have previously kept them from rate cuts, but with the country currently maintaining the second-highest key rate in the region—just behind Hungary—and still facing one of the European Union's highest inflation rates at 7.2%, there appears to be an emerging opportunity for monetary easing.

Romania's Cautious Approach Toward Easing

ING economist Stefan Posea has described Romania's central bank as 'preparing the ground for a cautious easing cycle ahead,' with a predicted cut to 6% by the conclusion of the year. However, Romanian officials will likely keep an observant eye on Warsaw's fiscal decisions, since the possibility of Romania's effective rate descending below Poland's key rate is challenging to envision.

Bucharest's central bankers seek a delicate balance as Romania grapples with its budget deficit, projected to hit 5% of its economic output this year. With the nation set to undergo four rounds of elections and an increasing call for raised wages and pensions, the financial stewards face a complex fiscal landscape.

Continuing this cautious trend, Romanian policymakers have trimmed their inflation forecast slightly to 4.7% from 4.8%. They remain vigilant, however, as looming domestic electoral and fiscal risks, in addition to geopolitical uncertainties, still cast a significant shadow over the nation's economic forecast.

Implications of Tax and Spending Measures

Polish monetary officials are deeply considering the repercussions of an augmented value-added tax on food and the termination of energy price caps. Such measures hold the potential to reignite inflationary pressures as the year progresses. Despite this, some members of Poland’s rate-setting Monetary Policy Council have expressed that rate reductions should remain a point of discussion.

Within this fiscal chess game, the broader question concerns how tax and spending measures on the national level might contribute to price pressures. Both Poland and Romania must reconcile internal fiscal moves with overarching monetary policy.

A Probe into Glapinski's Alleged Politicization

Governor Glapinski, already amidst the tempest of rate decisions, will also serve as a lightning rod for questions regarding accusations of his political engagement. Observers will listen closely to see if he doubles down or pivots from his prior assertions that the costs of borrowing wouldn't fluctuate soon.

The Constraints of Romania's Fiscal Position

Romania stands on precarious fiscal grounds with a deficit on the rise and socio-economic demands escalating. These circumstances lead to a complicated situation for Governor Isarescu and his team, who must juggle rate decisions against a backdrop of fiscal rigidity and electoral uncertainties.

The Anticipatory Stance of Romania's Fiscal Guardians

The scrutiny of Romania's central bank policy is also at the forefront, primarily due to its anticipation of potentially easing its rates in the near future. The National Bank of Romania's official inclination towards a gradual easing reflects not only economic strategy but also a cognizance of regional financial interplay.

Romania's Fiscal Forecast amid a Tumultuous Landscape

With an officially adjusted but still formidable inflation prospect and the vigilance demanded by numerous electoral, fiscal, and international variables, Romania's economic policymakers have their work cut out for them in the ensuing months.


The decisions of the central banks in Poland and Romania offer a glimpse into the broader narrative of fiscal and monetary policy in a shifting European landscape. In a world where economies are so interconnected, the deliberations within these financial institutions underscore the balancing act required to maintain economic stability while navigating policy, political, and societal currents.

The full Bloomberg article providing information on the central banks' actions can be found here.

Source Link Information:

The news updates and insights on Poland and Romania's central bank decisions were assisted by contributions from Bloomberg journalists Barbara Sladkowska and Joel Rinneby. Their expertise helps shed light on the implications of these rate choices and the expected economic outcomes.

Bloomberg L.P. ©2024 further provided background and context to the information discussed within this article.

With continued observance and analysis, financial experts and policymakers alike will watch as both nations navigate the intricacies of economic stewardship. As with all global financial matters, only time will tell how these decisions will ultimately affect the local and regional economies of Poland and Romania.

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