Q: After successive increases to interest rates at the end of 2021 and early 2022, is the Polish economy well positioned to face any further tightening of monetary policy conditions in 2022?
A: To address the risk of inflation remaining above the Narodowy Bank Polski’s (NBP) target in the medium term, the Monetary Policy Council decided to withdraw some monetary accommodation by increasing interest rates in October, November and December 2021, and again in January 2022. The NBP is likely to raise rates further this year to curb inflation and anchor expectations, but at the same time to support the ongoing economic recovery from the Covid-19 pandemic. This means that, in future decisions on the scale and pace of monetary policy tightening, the important factor will be to ensure that the unemployment rate does not rise significantly and that further economic growth is not undermined. The central bank will also take into consideration the incoming economic data and the uncertainty about the evolution of the pandemic.
