Poland

Polish Financial Markets See Records And Concerns

Warsaw, Poland 4 March, 2006 - Poland, as a result of slow rates of wage increases and low food prices, is seeing very low inflation. It stands at .7 percent and is among the lowest in the EU.

In response to the state of the Polish economic indicators, The National Bank of Poland reduced the seven-day intervention rate to 4 percent from 4.25 percent; the discount rate to 4.25 percent from 4.5 percent and the Lombard rate to 5.5 percent from 5.75 percent. The rates are the lowest in Poland's history.

But all is not roses.

EU Commissioner for Economic and Monetary Affairs Joaquin Almunia is concerned about Poland's financial condition. He has recommended that Poland use any excess funds, such as additional income or unplanned for spending cuts, to reduce Poland's budget deficit. Failing to do so can cost Poland billions of Euro in EU funds.

At the same time a bill has been put before the Polish Sejm by the minority political party Samoobrona which bill would change the role of the bank from limiting inflation to being more positive in stimupating the economy. This prompted Lezsek Balcerowicz, Head of the National Bank of Poland (NBP,), to ask parliamentary speaker, Marek Jurek, to explain why has allowed a bill that gives the bank a role different than the one specified in the Polish constitution to go before the pariliament.

As it stands, Poland's financial situation is quite stable as the new governemet gets established. But critics are concerned about the future as new policies are put in place that will radically change policies of the past.

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