Political noise distracts central Europe’s rate-setters

The central bank governors of Poland and Hungary are caught up in noisy disputes with opponents over their rate-setting policy, raising new hazards for investors willing to brave central Europe's bitterly polarized politics.

In Poland, governor Adam Glapinski stands accused of having tried to boost the economy with rate cuts to help his longtime allies in the Law and Justice (PiS) party secure a new term in last month's elections - unsuccessfully, as it turned out.

In Hungary, central bank governor Gyorgy Matolcsy is under pressure from Viktor Orban's government to cut rates further ahead of local and European Parliament elections next year.

The rows come against a backdrop of regional inflation that remains markedly higher than that in western Europe, driven up by structural factors like very tight labour markets but also repeated patterns of pre-election...