Poland to Keep Interest Rates Unchanged, Surveys Show

Central bank in Poland will probably leave its benchmark interest rates unchanged on concern government spending is stoking inflation, surveys of economists show.
In Poland, the Law & Justice and Citizens' Platform parties are squabbling over spending cuts in talks to form a coalition cabinet following Sept. 25 elections. At risk are central bank plans to lower rates to the European Central Bank's 2 percent level before adopting the euro.
Poland's annual inflation rate was 1.8 percent in September and may rise as economic growth spurs consumer spending and the new government proves unwilling to trim the deficit, central bank policy maker Dariusz Filar said Oct. 19.

The Law & Justice party and Citizens' Platform, which took first and second place in Poland's parliamentary election, have been unable to form a coalition for a month partly because of disagreements over welfare spending, the size of tax cuts and a target date for adopting the euro.

Law & Justice, which will control the premiership and the Finance Ministry, wants to ditch the outgoing government's plan to adopt the euro in 2009 so it can slow the pace of budget cuts needed to make the deadline.

(Source: bloomberg.com)