Governments have two broad policies of affecting aggregate demand-the total spending on goods and services at a given price level), of an economy, and one of them is through monetary policies.
In an effort to increase aggregate demand, the Polish government has implemented monetary policies - a set of official policies governing the supply of money and the level of interest rates in the economy. Through the polish central bank, the government has cut the interest rate to 3.75%, the lowest interest rate level since 1990.
The new low interest rate – the cost of borrowed money) is expected to have positive effects on the polish economy.
Firstly, it is going to discourage the incentive of saving money in the banks, as people will earn low interest in return. A fall in interest rate will also increase consumer confidence which will probably lead to increased purchase of goods.