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Economists don’t know what to think

“If somebody had told you 15 years ago that there was going to be a decade of money, that was not going to cost anything, you wouldn’t have believed it” told us Andrzej Olechowski, politician and economist.
“Now in some countries you even have to pay the bank for keeping your money and we are shocked that this period is coming to an end and inflation is returning. Now inflation is a bit of a riddle. The situation in Poland is now inflationary – There are big budgetary expenditures, a lack of labour, low investment rates so we can expect inflation to come back, and it will be high. Economists don’t know what to think. They have survived the trauma of making very wrong predictions in the past so now they prefer to be cautious. The market expects to see the first increase in interest rates in Poland in mid 2018. By how much this increase will be, depends on inflation.
As you know, investment can be derived from the resources of companies and from a society’s savings, part of it is capital and part of it is bank reallocation through loans. In both of these cases there’s a problem. The legal and political situation in Poland is unstable. It is not clear what the regulations, interest rates, politics will be or whether they will target inflation or supply. The only thing that is holding back this investment is this uncertainty. And now the political situation is encouraging us to consume and not save. Interest rates on savings are relatively low, wages are rising, so people think: “maybe we’ll spend now and think later". Poles have never liked saving money, but now their inclination to do so is even less. We want to spend the same way we did 20 years ago” said Andrzej Olechowski.
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