Poland to cut near-zero interest rates in 2021

Bloomberg

Poland’s central bank is analysing the impact of potential interest-rate cuts that could take place in the first quarter of 2021, Governor Adam Glapinski said.
While the current, record-low reference rate of 0.1% is “appropriate and best suits the situation,” the central bank may reduce it further, the Governor said in an excerpt of an interview published on the obserwatorfinansowy.pl website.
Polish rate setters cut the official rate by 140 basis points and started a quantitative easing program in the first half of 2020 as the coronavirus pandemic pushed the European Union’s largest eastern economy into its worst crisis since the collapse of communism.
While developed economies have years of experience in operating with negative interest rates, Poland has been reluctant to reduce borrowing costs to near zero amid concern that the weaker parts of its fractured financial industry depend on interest income for survival.
“The governor’s comments are very surprising — they show that the central bank intends to further stimulate the economy and weaken the zloty,” said Maciej Marcinowski, an equity analyst at Warsaw-based Trigon Dom Maklerski. “Additional rate cuts will be more severe for banks, as they won’t be able to pass negative interest onto savings.”