Monetary Policy

The basic statutory objective of monetary policy is to maintain price stability. At the same time, monetary policy is conducted in a way that helps maintain sustainable economic growth and financial stability.

The Monetary Policy Council has been pursuing the price stability objective by using inflation targeting strategy. Since 2004 the monetary policy objective has been to keep inflation –understood as the annual change in the consumer price index – at 2.5% with a symmetric band for deviations of +/-1 percentage point in the medium term. The medium-term nature of inflation target means that due to macroeconomic and financial shocks, inflation may temporarily deviate from the target and even run outside the band for deviations from the target.

NBP interest rates constitute the key instrument of monetary policy. Monetary policy instruments include also i.a.: open market operations, required reserve system and standing facilities.

According to the Monetary Policy Guidelines, monetary policy parameters, including NBP interest rates, are adjusted to the economic situation so as to ensure long-term price stability and, at the same time, support sustainable economic growth and financial stability. The monetary policy strategy pursued by the Council assumes flexibility of the instruments applied. This means that the range of instruments used by NBP can be adapted to the nature of disturbances observed in the economy and market conditions.

See also