The results of analytical and research activity are largely utilised in determining monetary policy
The results of analytical and research activity are largely utilised in determining monetary policy. The modelling of the monetary policy transmission mechanism, as well as modelling and forecasting inflation, are major areas of research. Structural econometric models are fundamental tools for regular scenario analyses and inflation forecasts. Structural vector autoregression models are additionally used in transmission mechanism research.
In-depth research of the competitiveness of the economy, the balance of payments as well as changes in the structure of the economy and their impact on inflationary processes and the labour market is also a prerequisite for shaping monetary policy. Large importance is also attached to research concerning households and consumer demand, including the quantification of inflation expectations of households. The research also includes the condition of the public finance sector and relationships between monetary and fiscal policies.
The analysis of monetary strategy within the euro zone and issues related to Poland’s future accession to this zone constitute a new direction for analysis and research work. The following issues are analysed and examined:
- general issues, including formal methods of analysing monetary policy, macroeconomic policies under uncertainty as well as optimal and resilient monetary policy rules;
- international matters, e.g. the international financial system and economic situation in the European Union countries;
- issues directly related to Poland’s accession to the euro zone, largely concerning the adjustment of monetary policy instruments to ESCB requirements, the conditions of Poland’s participation in the ERM II exchange rate system, the exchange rate of the zloty and the exchange rate policy before joining the euro zone.
The Polish financial system consisting of institutions and financial markets as well as legal regulations stipulating the rules of their functioning and their relationships is another area of analytical and research activity. The development and stability of the financial system are major subjects of analysis. Potential threats to the stability of the financial system and their consequences are also examined.
The mutual effect between the standing of financial institutions (and banks in particular) and the monetary policy pursued by Narodowy Bank Polski are an important area of research. Among other things, the expectations of financial markets concerning NBP interest rate policy and the foreign currency exchange rate are analysed. The results of such analyses are used by NBP to construct an early warning system against situations threatening the stability of the financial system and the entire economy.