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Not Just the UK: Poland Sees What Happens When Inflation Ignored

  • Polish yields jump to two-decade high on dovish monetary tilt
  • Premier vows responsible policy, rules out non-standard tools
A customer shops at a butcher's stall in a food market in Warsaw.

A customer shops at a butcher's stall in a food market in Warsaw.

Photographer: Bartek Sadowski/Bloomberg
Updated on

Poland is painfully finding out what happens when investors start to fear that policy makers are turning their backs on inflation to keep the economy humming for next year’s election. 

The bond market meltdown accelerated on Friday, with 10-year yields surging as much as 39 basis points to 9.01%, before regaining some losses. In the past month, Polish debt has fallen more than anywhere else in the world. The yield spike is even worse than the UK, where a massive selloff helped bring down the prime minister.