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Tuesday, January 18, 2022

Inflation in Poland. Adam Glapiński, the NBP president, comments

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Inflation in Poland is at levels not seen since December 2000. – We will do everything to keep inflation as short as possible and to keep it as gentle as possible – said President of the National Bank of Poland Adam Glapiński on Wednesday. – According to our current forecasts, after the first quarter (2022 – ed.) It will decrease and will not be so painful, although it will be around 5% – added Glapiński.

According to preliminary data of the Central Statistical Office, inflation in November is year on year increased by 7.7 percent. This is the highest level since December 2000, when inflation was 8.5 percent year on year.

– I can assure you that inflation is our main concern. Ours, but also the government. We will do everything to keep inflation as short as possible and to keep it as gentle as possible. According to our current forecasts, it will decrease after the first quarter and will not be so painful, although it will be about 5% – he said on Wednesday during the gala of the 19th edition of the Władysława Grabski, NBP president Adam Glapiński.

This is a level above the NBP’s inflation target of 2.5%. plus / minus 1 percentage point.

Glapiński referred to the words of Jerome Powell, chairman of the Federal Reserve Board (Fed), who said that he quits saying that inflation is temporary and must admit that it will be a nuisance. – I would also like to say that today. I change my rhetoric. Inflation is temporary, but over a 2-year period, and this is not known either, although this is how we see it now. Inflation is not temporary, inflation is burdensome. We will try to reduce it to minimum levels, but not at the expense of high unemployment. I don’t think anyone will force us to do so. Nobody is forcing us to substantially increase unemployment. This cannot be done in Poland. And we will be able to deal with inflation – assured Glapiński.

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PAP / Maciej Zieliński

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Interest rates and inflation

The head of the central bank reminded that changes in interest rates did not affect the current inflation. The benchmark interest rate – following two increases in October and November – rose by a total of 115 basis points to 1.25 percent. The next Monetary Policy Council decision-making meeting is scheduled for Wednesday, December 8.

– This is directed forward, for a few quarters when secondary effects may appear, we want to prevent this. We have no influence on the inflation that is present at the moment. This can only be influenced by fiscal policy, which is what the government has just done. By reducing taxes, excise duties, or completely removing the burden. But of course it is also not a free lunch, of course it also means that there are lower budget revenues – said Glapiński.

– This means that the government will have less money to spend in some areas. It costs money too. Be it in social policy or investments, in some costs related to some activities for the common good – he added.

The Council of Ministers on Tuesday adopted draft act amending the act on excise duty and the act on tax on retail sales. The regulations provide for a temporary reduction in excise duty on motor fuels (diesel oil, petrol, LPG), exemption from excise duty for the sale of electricity used by households and a reduction in the excise duty rate for electricity. There is also a temporary exclusion of fuel sales from taxation with the tax on retail sales.

The NBP governor made a reservation that despite the problems with inflation and the pandemic, the economic situation in Poland was very good. – Even with this increased inflation – because it is not hyperinflation or super inflation, it is simply increased inflation – the economic situation of Poland is very good. This is the best economic situation since the partitions. Poland is the first of the large countries to recover from the crisis, with a dynamics of around 5 percent of GDP – said Adam Glapiński.

President of the National Bank of Poland, prof. Adam Glapiński at the gala of the W. GrabskiNBP

Main photo source: NBP



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